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Last Updated Thursday August 16 2018 07:27 PM IST

Rotomac scam: Allahabad Bank confirms Rs 517cr exposure

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Rotomac fraud The three outstanding loans together amount to Rs 516.79 crore.

New Delhi: Amid worrying reports of hefty loan defaults strangling the public sector banks in India, state-owned Allahabad Bank confirmed exposure of Rs 516.79 crore to crisis-hit Rotomac group.

The bank also revealed that the lender has made required provisioning for the same as per RBI norms as the credit had turned non performing.

Responding to a clarification sought by exchanges on news article "Rotomac owner flees India after taking Rs 800 crore loans', the Allahabad Bank said the group is "having an exposure from our bank since 2006".

There is an outstanding of Rs 43.09 crore to Rotomac Exim Pvt Ltd as a sole banker, Rs 314.56 crore to Rotomac Global as multiple banking lending and Rs 159.14 crore to Rotomac Exports as a consortium arrangement with Bank of India as a lead banker.

These three loans amount to Rs 516.79 crore.

"The aforesaid accounts of Rotomac group classified as non-performing assets as per IRAC norms of the RBI and the required provision has been made," it said in a regulatory filing.

The bank said the accounts of Rotomac Global and Rotomac Exports have been filed in National Company Law Tribunal (NCLT) and was admitted on September 20, 2017.

The recovery process under SARFAESI is in process by the bank for the third Rotomac group company, namely, Rotomac Exim Pvt Ltd, it said.

A number of banks have made announcements to the stock exchanges clarifying on the news since their names have appeared in the news item earlier this week.

Bank of Baroda has an exposure to the tune of 456.60 crore to Rotomac group companies that it declared as bad loans in October 2015 and has already started recovery process by registering the case under Corporate Insolvency Resolution Process at NCLT.

Besides, Bank of India, Union Bank of India and Indian Overseas Bank also have their respective exposures to the Rotomac group and they have resorted to the available mechanisms to recover their dues.

After the enactment of Insolvency and Bankruptcy Code in 2016, the banks have started going to corporate insolvency resolution process to recover their dues from borrowers.

Complaints have already being lodged with the CBI, ED and Directorate of Revenue Intelligence against the Rotomac group. After the CBI and ED, the Income Tax Department has stepped up action against Kanpur-based Rotomac group and its promoter, attaching 11 bank accounts in connection with an alleged tax evasion probe against them..

The accounts of the group in various bank branches in Uttar Pradesh have already been attached by the agencies.

Stock of Allahabad Bank closed 0.97 per cent up at Rs 52.15 on BSE.

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