Friday, June 18, 2021
Home Editor's picks As ArcelorMittal gears up to clear Rs. 7,500 crores due to SBI, Modi's IBC...

As ArcelorMittal gears up to clear Rs. 7,500 crores due to SBI, Modi’s IBC sends a clear message: Pay up or shut shop

One of the Modi government’s biggest reforms was also one that was done very quietly. This was the Insolvency and Bankruptcy Code Bill, which has forever changed India’s business model from one of crony capitalism to a rule-based regime.

So, first of all, let me splash the latest piece of good news.

Untitled

ArcelorMittal is set to return Rs 7500 crore to SBI. No wonder then that the chairman of SBI is relieved.

What happened here requires some explanation. As the Prime Minister has recently mentioned on several public platforms, the total amount of loans given by banks in the ten years of UPA (2004-2014) was a whopping 34 lakh crore. That’s near twice the 18 lakh crores lent by Indian banks all the way from 1947 to 2004.

A significant chunk of the loans that the UPA handed out like candy has now gone into default, leaving the nation with a crippling NPA mess. The Prime Minister likes to refer to the UPA years as times of “phone banking” when big businesses would get “naamdars” to call up public sector banks and force them to give out these loans. Remember that when these loans went into default, it is we the people who got stuck with the bill.

The biggest single reform that Modi sarkar brought in order to end crony capitalism was the Insolvency and Bankruptcy Code Bill, 2016. In simple terms, the bill created a time-bound mechanism by which creditors could go after a loan defaulter. If the defaulter is unable to pay within a fixed period (usually only 6 months), they lose control of their company. Their assets are seized and auctioned.

In fact, India is one of the few countries in the world to have a time-bound mechanism for resolving corporate debt. This is why the World Bank was all praise for India’s IBC code while announcing India’s sharp jump in Ease of Doing Business earlier this year.

Untitled

So what happened with ArcelorMittal here?

The matter pertains to Essar Steel, a company saddled with massive debt, which is set to be auctioned off. Now, several companies would like to buy Essar Steel and Arcelor Mittal is among them.

This corporate tale reads like a fascinating thriller cum detective story. Except there is one twist. Remember that *we* the people are on the line for all the loan defaults.

First, Essar Steel gets listed as one of RBI’s ‘dirty dozen’ companies, i.e., companies that are sitting on a mountain of bad loans.

Untitled

So, Essar Steel is put up for auction. But then, the government learns something shocking.

Untitled.png

Essar Group was trying to buy its own company back at the auction, effectively discharging its defaulted loan AND buying back the asset at a rock bottom price. The next day, Modi Cabinet swung into action and rushed through an ordinance to stop this.

Untitled

NO! As a defaulter, Essar is prohibited from bidding. And no using “related parties” to get around the rules either.

Two bids come in: one from Russian Steel major Numetal and another from Arcelor Mittal. And Lakshmi Mittal, who may or may not be aware that the UPA era has ended, decides to “meet the Finance Minister” in order to “explain” why ArcelorMittal is the “best fit” for acquiring Essar Steel.

Ha! Meeting the Finance Minister was of no use. BOTH bidders were rejected. 

Untitled.png

The first bidder Numetal was rejected because it had some connection to Rewant Ruia, the son of Essar Group’s Ravi Ruia. Remember how Modi’s IBC prevents “related parties” from trying to buy back their own assets through the back door.

As for ArcelorMittal, they were rejected too, because they had some stakes in two other companies called Uttam Galva and KSS Petron that had defaulted on loans. Both companies moved the courts to save their bids, but it was of no help.

Untitled.png

The law was absolutely clear. The first bidder Numetal was allowed to place its bid only *after* it severed ties with the Ruias.

As for Arcelor Mittal, they were asked to pay back Rs 7000 crore of loan default before they could bid for Essar Steel.

Cut to October. With their tails firmly between their legs, Arcelor Mittal has now agreed to pay back all their dues.

Now you see why SBI Chairman is so relieved. We should be relieved too. SBI was a public sector bank. This was our money.

This is not just the story of one company or business. There are dozens of defaulters lining up all across India to pay back the loans they defaulted on.

Untitled.png

If you default on loans, you can’t do business. At least not until Modi is around. Now you have a good idea why the opposition desperately wants the chowkidaar out of office.

Untitled.png

Modi sarkar is moving the country from crony capitalism to a rule based regime, the foundation of any first world country. The days of “meeting” the Finance Minister and sorting out matters are long gone. But those days could come back after 2019. You can see why a huge section of vested interests in this country and beyond would want those days back. It is we the people who stand between them and their good old days. Remember that it’s our money, after all.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Abhishek Banerjeehttps://dynastycrooks.wordpress.com/
Abhishek Banerjee is a math lover who may or may not be an Associate Professor at IISc Bangalore. He is the author of Operation Johar - A Love Story, a novel on the pain of left wing terror in Jharkhand, available on Amazon here.  

Related Articles

Trending now

Farmer org releases unclear video to claim man committed suicide at Tikri border, clearer video shows man accusing ‘farmer’ of setting him on fire

A man was burnt alive and succumbed to his injuries after visiting the Tikri border where farmers are protesting

Haryana: Man burnt alive to make him ‘martyr’ against farm laws, villagers demand security from ‘farmers’ at Tikri border

As per reports, casteist slurs were hurled towards Mukesh after which he was set on fire. A video of him being set on fire has gone viral on social media where one can hear casteist abuses being thrown at him before he was set ablaze.

How a personal animosity was turned into defaming ‘Jai Shri Ram’ chant: All you need to know about Ghaziabad incident

The chronology of what all transpired in the fake 'hate crime' story where an elderly Muslim man claimed he was attacked and forced to chant 'Jai Shri Ram'

Mamata Banerjee govt recommends suspension of several accounts from Twitter, YouTube and Facebook, for criticising her: What we know

Sources indicate that Govt of West Bengal recently recommended the suspension of over 200 accounts for criticising Mamata Banerjee

The churn in Bengal BJP is normal and on expected lines. Here is why I don’t worry too much about it

Candidates don’t matter so much in Bengal, party affiliations do. The TMC proved this beyond all possible doubt in 2021.

The Wire tries to force fit a ‘hate crime’ angle in Ghaziabad incident only because victim is a Muslim

The Wire lowers its bar, goes from whitewashing Islamist terrorists to defending random 'taveez maker' from rural Uttar Pradesh

Recently Popular

Pakistani audience go ballistic over Zee5 web series featuring Muslim girl-Indian Hindu boy love story, call it ‘haram’

The Pakistani web series features the love story between a Pakistani Muslim girl and Indian Hindu boy who have both lost their fathers to the conflict between the two nations.

Dhruv Rathee fans mark YouTuber Karolina Goswami for targeted harassment after she exposed his lies

After Karolina Goswami pointed out the factual errors and mistakes in the Dhruv Rathee video, Rathee's supporters have been harassing and abusing Goswami.

Ghaziabad fake hate crime case: Unmuted video of elderly man seconds before he was beaten up released. Watch

In the video, Abdul can be heard admitting that one Intezar sent some people to him to make the 'tabeez' (occult amulet) and put them in his spell as he had some work from them.

AAP celebrates Delhi’s new architectural marvel, the Moti Nagar speed breaker

AAP's Moti Nagar MLA has recently inaugurated a speed breaker, along with dozens of supporters flouting social distancing norms.

Twitter India MD told Delhi Police he does not know directors and owner of his company, details of his boss: Feigning ignorance or...

Twitter India MD Manish Maheshwari said he does know who owns Twitter India, and which company his boss Yu Sasamoto belongs to

Virtual hearing embarrassment: Congress leader Abhishek Manu Singhvi caught attending the court proceedings without pants

Abhishek Manu Singhvi was caught attending court proceedings in boxer shorts when one of the screens accidentally fell off and showed the naked legs of the senior advocate
- Advertisement -

 

Connect with us

255,564FansLike
554,234FollowersFollow
24,400SubscribersSubscribe