Context:
Directors of the State Bank of India (SBI) board have okayed a restructuring package for Vizag’s Rashtriya Ispat Nigam (RINL), paving the way for similar moves by other public-sector lenders and marking a milestone in the company’s turnaround initiatives.
Overview of the Restructuring Package
- Approval: SBI board clears loan restructuring for Rashtriya Ispat Nigam Ltd (RINL)
- Lead Role: SBI becomes the lead lender, taking over from Union Bank of India
- Purpose: Revive operations of RINL’s 7.5 MTPA steel plant in Visakhapatnam, Andhra Pradesh
Key Features of the Restructuring Plan
- Interest Rate Reduction: From 14–15% to below 9%
- Lower Margin Money Requirement: Eases access to working capital
- Plan Prepared By: SBI Capital Markets
Financial Context and Support
- Total Banking Exposure: ₹20,000+ crore
- SBI’s Exposure: ₹6,400 crore
- Government Bailout Package: ₹11,440 crore
- Equity Infusion: ₹10,300 crore approved by the Union Cabinet
- Funds Received: ₹6,000+ crore already infused
- Balance Tranches: To be released during 2025
- Improved Repayment Profile: RINL is now a standard account, with repayments ahead of schedule
Implications for Banking Sector and RINL
- Positive Signal to Other PSBs: With SBI’s approval, other government banks expected to follow suit
- Turnaround Milestone: Crucial step towards financial viability and profitability of RINL
- NPA Avoidance: The company was on the verge of NPA classification in June 2024
- Enhanced Borrowing Capacity: Relaxation in terms improves liquidity for operations
Strategic Importance
- Policy Shift: Reflects a coordinated approach between government and banks to revive strategic PSUs
- Industry Impact: Sets precedent for revival of other financially stressed public-sector industrial firms
