Post Banking Ordinance, steel sector NPAs to be resolved first: government sources

Non-performing assets (NPAs) in the steel sector are expected to ease in FY18.

According to government sources NPAs in steel sector will be resolved first post the Ordinance that was signed last week. Joint Lender Forum or State Bank of India will prepare a framework to address the NPAs.

Hair-cuts will be decided on a case-to-case basis. Some steel companies could be asked to provide personal guarantee, loan extension or upright payments.

Sources further said that Bhushan Steel could be brought under the Scheme for Sustainable Structuring for Stressed Assets (S4A), according to government sources.

The company is likely to close refinancing from a German bank. Due diligence for the deal is underway.

The company, which had a debt of over Rs 44,477.90 crore in 2015-16, added nearly Rs 10,000 crore in interest, including penal interest, over the past three years.

According to earlier reports, bankers to Bhushan Steel had said that the company may not qualify for the S4A scheme, where half of the company's debt will have to be categorised as unsustainable and repayment schedule for short terms loans is not allowed if you classify 50 percent of debt as sustainable.