The steel sector has been hurting from weak steel prices, and the pain is being felt by the banks as well, which have given loans to these firms.
Matters have now reached a flashpoint, and CNBC-TV18 learns that the Banking Secretary has written to the Steel Secretary seeking his intervention in the matter. The bank credit to the steel sector stands at Rs 2.77 lakh crore and steel companies are having trouble repaying the loans because of low production.
The Banking Secretary has highlighted eight major steel projects which contribute to 54 percent of the total exposure of these banks to steel projects.
The projects includes those of Bhushan Steel, Electrosteel, Essar Steel India, Usha Martin, Visa Steel, Bhushan Power and Monnet Ispat.
The Banking Secretary has also asked the Steel Secretary to protect the sector from cheap imports, consider an effective anti-dumping duty and levy appropriate duties
He has also asked the government to consider steps like easing mining norms and better raw material supply to the sector as a whole.
He has also suggested steps to ease constraints of steel companies, allow sale of iron ore including low grade of ore via NMDC, Odisha Mining Company and SAIL till auction of mines kick off.
Other considerations include identifying logistics required to transport iron ore and avail benefit of railways for classified primary steel projects.
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