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Business News/ Companies / News/  Banks settle debt with West Bengal PSU, give up accumulated interest of Rs175 crore
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Banks settle debt with West Bengal PSU, give up accumulated interest of Rs175 crore

Under the Insolvency and Bankruptcy Code, the lenders agreed to give up the interest and settled the account of West Bengal Essential Commodities Supply Corp. for an aggregate payment of Rs186 crore

A defaulter for years, West Bengal Essential Commodities Supply Corp’s total accumulated dues were around Rs360 crore.Premium
A defaulter for years, West Bengal Essential Commodities Supply Corp’s total accumulated dues were around Rs360 crore.

Kolkata: Lenders have agreed to give up the entire accumulated interest of around Rs175 crore to settle a dispute with a state-owned enterprise in West Bengal over overdue loans, effectively sharing the cost of a series of frauds, some dating back to 2004-05.

The Economic Times newspaper had reported in its edition dated 22 November that West Bengal Essential Commodities Supply Corp. (WBECSC) emerged to be the first public sector company to settle its dues under the newly promulgated Insolvency and Bankruptcy Code.

A defaulter for years, the company’s total accumulated dues were around Rs360 crore. The lenders had moved the Kolkata bench of the National Company Law Tribunal (NCLT), and got an administrator—or so called resolution professional—appointed in May.

On the strength of state guarantee for repayment, the lenders were initially keen to press for recovery of the entire amount that the corporation owed, said Anil Goel, the resolution professional appointed by the NCLT. Eventually, after six meetings of the committee of creditors, the lenders agreed to give up the interest and settled the account for an aggregate payment of Rs186 crore, he added.

An official at Allahabad Bank, one of the lenders, said the bank had recovered the principal from the corporation and settled the account. This official, who did not wish to be identified, declined to share any other details.

The corporation was founded to procure food grains and to intervene to stabilise markets for essential commodities, but in 2004-05, got into a deal with private enterprises to import clinker from Indonesia. The consignment was, in turn, exported to Bangladesh but was returned because of quality issues, said a key WBECSC official, who, too, asked not to be named.

“Surprisingly, some of the returned clinkers didn’t ever come back, and the loss from the deal was conservatively estimated at Rs30 crore," this person said.

Again in 2008, the corporation got into deals with the same set of private enterprises as previously to export iron ore to China. The exported consignment was again returned because the iron content of the ore was found to be poor. This time the loss was even bigger, and since then WBECSC has been making losses, according to the official.

After Mamata Banerjee took office as West Bengal’s chief minister in 2011, an arm of the state police, Criminal Investigation Department, started a probe into the shady deals of the corporation. Several officers, including two IAS officers who served as the managing director, were arrested.

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Published: 24 Nov 2017, 12:36 AM IST
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