Any financial bailout package for distressed Indian steel companies will have to come from commercial banks, instead from the government’s budgetary allocations, a senior Indian government official said on Monday, March 15. The official said that commercial banks as lenders will take a final call on any bailout package as demanded by the Indian Steel Association (ISA), the representative body of steel producers in the country.
Whether commercial banks extend a financial helping hand to steel companies would entirely dependent on the banks’ commercial lending norms and the decisions of the respective banks’ board of directors, and government budgetary funds will not be available for directly funding of such bailout packages, the official said.
According to one estimate, as of the end of June 2015 bad loans to the steel and power industry stood at $23 billion. The ISA has sought government financial help, seeking a moratorium on repayment of interests and principals for half of all debt extended to steel companies by banks, with the balance to be divided into small equitable parts to be repaid over a period of time.