26 PSU banks hit a bad debt of Rs 3000cr

Twenty-six Indian banks including leading PSU banks are staring down the barrel of a Rs 3,000 crore hit. The reason being loans extended to little known real-estate company Zoom Developers, reports CNBC-TV18’s Vidhi Godiawala.
Zoom Developers is a Mumbai-based project development company with majority of its project in overseas. Twenty-six banks have admitted a total of nearly Rs 3,000 crore of Zoom Developers debt into the corporate debt restructuring (CDR) sell. in this, Rs 3,200 crore is in terms of non-funded bank guarantee of which Rs 900 crore is already being invoked by the banks and Rs 300 crore is in terms of line of credit (LC) and loans and the rest nearly of Rs 400 crore is debt of its subsidiary and group companies.
The company went into losses in September, 2009. It made losses of Rs 300 crore of which Rs 146 crore is forex losses. The entire slowdown in the global economy has taken its toll. The cash of the company dried up due to which they differed the payment to the lenders—substantially debtors realisation cycle increased to 150 days as compared to earlier 35 to 45 days.
According to sources, Punjab National Bank (PNB), which has a exposure of Rs 350 crore, has referred this case to the CDR cell. Some of the other banks involved are Yes Bank, Union Bank, UCO Bank, Canara Bank. In fact, Canara Bank and Andhra Bank have already classified this Zoom Developers account as a non performing asset (NPA) on its books.
Zoom Developers on their part admitted that the company is in CDR process with its lenders and they are not expecting too much of sacrifices from the banking system and they have sold some of their property—they have sold their offices in March and April to pay salaries to their employees and also pay some interest. They are looking to sell some more properties to repay their loans.