These days, ICICI is one angry bank. Last week, the financial-institution-turned-bank swooped down on Rasiklal Mardia-promoted Mardia Chemical's Vatwa plant to seize the facility. Barely days later, the bank moved to attach assets of the Pune-based Patheja Group. Both Mardia and Patheja owe ICICI, financial institutions, and other banks Rs 1,450 crore and Rs 1,000 crore, respectively, and had been dithering on repaying the loans. Barely a month ago, such a drastic move would not have been possible for ICICI. But the passage of a new bill, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Bill 2002, has added teeth to angry lenders like ICICI. The bill allows lenders to attach and sell assets of defaulters to recover their bad loans. And of that there's a lot.

At last count, there was Rs 1,10,000 crore in non-performing assets, or bad loans. The list of defaulters includes prominent corporates such as Usha Ispat, Usha Telecom, Koshika Telecom, Lloyds Metals, Parasrampuria Synthetic, Modern Syntex, Core Healthcare, Altos India, and Ganesh Benzoplast. According to available figures, ICICI has issued notices to 24 defaulters and IDBI to another 75. The figures are alarming. IDBI alone has another 525 NPA accounts, where Rs 6,500 crore is stuck. In the case of ICICI, its net NPA stands at a staggering Rs 2,879 crore. Then, there are public sector banks, who have Rs 80,246 crore in NPAs.

Worringly, the NPA figures do not include outstanding borrowings of over Rs 20,000 crore by Essar Steel, Jindal Vijaynagar, Ispat Industries, Malavika Steel or the SPIC Group, which have got their loans rescheduled. Neither does that include the Rs 6,000 crore that institutions and banks have sunk in Enron's Dabhol Power Company, or the Rs 1,000 crore invested in the defunct Daewoo Motor India. Vijay Kalantri, President of All India Association of Industries, feels that the FIs are being harsh. "It is essential that the banks look at the reason why the promoters have turned defaulters before taking action under the new law," he says. To reinforce his argument, Kalantri points out that of the Rs 1,10,000 crore bad loans, only about Rs 20,000 crore is due from the private sector. The rest, he says, is due from various state cooperatives and units.

Maybe. But as single accounts, corporates are probably the biggest defaulters (see Critical Mass) and, therefore, it makes sense for the FIs to target them first. Yet, questions remain. The biggest is, will the FIs be able to find buyers for the assets they attach? Even if they find buyers, what extent of the loan would they be able to recover? Take Mardia Chemicals, as an example. Of the Rs 1,450 crore that the group owes to FIs, only Rs 800 crore is the principal amount. The rest is interest charges. Also, there's risk of prolonged litigation. The Mardias, for instance, have sued ICICI for Rs 5,600 crore in damages. They contend that their losses are due to ICICI Bank not disbursing the sanctioned loan, and incorrectly adjusting the balance loan amount against interest and principal repayment. ICICI, however, has termed the suit "frivÖlous". Still, the new bill presents a golden opportunity for the FIs to clean up their books. They should make the most of it.

-ROSHNI JAYAKAR

CHAMBER HORRORS
WEF Weeps
The Confederation of Indian Industry goes out of its way to avoid irking the government and succeeds in doing just that.

When the Confederation of indian industry (CII) and World Economic Forum (WEF) got together to organise this year's India Economic Summit, they decided to do it differently. "The entire programme was restructured around scenario studies," says CII Deputy Director General Ajay Khanna, an effort targeted at avoiding the government-bashing that normally forms the staple at the summit. Only, the government was in no mood to forget the slights of earlier years including former WEF Managing Director Claude Smadja's rant act. So, when CII Director General Tarun Das sought to get on with it all in the absence of the Finance Minister (the first in 18 years of the summit) and the Prime Minister, his efforts were labelled a sign of arrogance by a touchy government. And Federation of Indian Chambers of Commerce and Industry (FICCI) Secretary General Amit Mitra extolled his chamber's ability of working with the government. The buzz has it that CII's invitation to Congress President Sonia Gandhi to inaugurate its annual session earlier this year, and a critical discussion of the Gujarat riots at the session marked the beginning of the rift. Still, maybe too much is being read into the absence of the PM and the FM. The former has missed it on earlier occasions too, and the FM was busy with a G-20 meeting. And other ministers and bureaucrats did participate in the summit. It could well be that both gentlemen chose to give the event a go by when their own government was divided on key reforms related issues.

-SUVEEN K. SINHA