Kolkata: Allahabad Bank has moved the Kolkata bench of the National Company Law Tribunal (NCLT) seeking insolvency resolution at two state-owned enterprises under West Bengal’s transport department.
In two separate petitions, the Kolkata-based lender has alleged that West Bengal Surface Transport Corp. Ltd (WBSTC) and West Bengal Transport Infrastructure Development Corp. Ltd (WTIDC) had borrowed money to buy buses under the Jawaharlal Nehru National Urban Renewal Mission in December 2009, but hasn’t still repaid the loans.
In West Bengal, government-owned sick companies have always been a challenge for the administration. The state has started a drive to strengthen its commercial enterprises by way of closure and merger, but chief minister Mamata Banerjee has made it clear that no one is to be laid off.
When it comes to state-owned enterprises, West Bengal is not much different from other states, defended a key official in the finance department, who asked not to be named.
“Such are the political compulsions that the government would much rather allow these firms to run sub-optimally than take bold decisions," he added.
In a potential embarrassment to bureaucrats, Allahabad Bank is now looking to take control of the two transport corporations and put at their helm a better management for recovery of its loans.
Alapan Bandopadhyay, principal secretary in the transport department, declined to comment because the matter was in court.
WBSTC had taken a loan of Rs34.86 crore to buy 120 buses, and WBTIDC had taken a loan of Rs33 crore to buy 330 buses under the Centre’s urban rejuvenation scheme.
The buses were bought and almost all given out on private lease to different operators, said a transport department official, who, too, asked not to be named. After a point, the operators stopped paying rent to the corporations, and they, in turn, started to default on bank loans, he added.
“The bank is of the view that if managed properly, these companies can be revived," said Om Narayan Rai, legal counsel for Allahabad Bank. Over the years, in the books of these enterprises, the value of these buses may have been fully written down, but there’s still hope of recovery of the loans if the management changes, he added.
The two companies together owe Allahabad Bank around Rs70 crore inclusive of interest. The accounts were declared as non-performing assets back in 2013, the bank has said in its petitions.
In July 2011, WBTIDC had requested the bank for restructuring of the loan, and within four days, it was permitted. The bank had extended the tenure of the loan and had agreed to a repayment plan spanning 69 months. But in October 2012, the company again asked for restructuring, but this time, the bank declined to change the repayment terms.
Banks normally tend to be lenient with state-owned corporations, said a key official at Allahabad Bank, who, too, asked not to be named. “We are not apprehensive of any foul play or diversion of funds," he said.
“It’s a case of bad management."
These aren’t the first state-owned enterprises from West Bengal to be dragged to the NCLT. West Bengal Essential Commodities Supply Corp. Ltd settled its dues with lenders last year after years of delinquency. It was found that the company, incorporated to procure food grains, had incurred losses from overseas trades in clinker and iron ore. Banks gave up their entire accumulated interest of around Rs175 crore to settle the dispute.