ICICI, Axis, State Bank of Travancore, State Bank of Mysore, UCO Bank and IDBI are among the others with a combined exposure of Rs 1,200 crore to the Chennai-based company, promoted by industrialist A C Muthiah and Farouk Irani, the latter a pioneer of the leasing business in India.
Bankers are not hopeful that the account can be upgraded. They indicate the entire exposure might have to be written off, if recovery proceedings don't get
|LOANS TURNING BAD|
Following an inspection of the books of accounts as on March 31, the Reserve Bank of India (RBI) had, in September, barred the company from transacting business, and to not accept public deposits. The company moved the high court at Chennai, challenging the central bank order. Later, both Irani, managing director since 1973, and Muthiah, the chairman, resigned from the board.
Last week, one of its directors, N Ramakrishnan, and Sheetal R, company secretary, had also resigned. Rajeeva Prakash was appointed additional director (independent & non-executive) on its board.
As on March 31, the public deposit dues were close to Rs 49 crore but the annual report said all these had been paid, with interest. In a filing to the stock exchanges in October, the company said RBI had appointed an auditor for a special examination of the book of accounts and transactions, from the year ended March 31, 2010. N C Rajagopal & Co, chartered accountants, had been appointed for this.
The stock price has declined by a little more than 80 per cent after RBI's order to bar it from business. It closed at Rs 14.85 on Monday, down 0.7 per cent from the previous close.