State Bank of India, the country’s largest lender, has signed a Memorandum of Understanding (MoU) with Brookfield Asset Management to form a joint venture that will invest in stressed assets.
Brookfield will commit about Rs.7,000 crore and State Bank of India up to 5 per cent of the total investments into stressed assets, according to a statement from the lender.
Global playersThe proposed JV will independently evaluate and invest in various stressed assets, and will rely on Brookfield’s operational expertise to manage recapitalized businesses, the bank said. The venture may also seek participation from other lenders in the identified assets.
SBI Chairman Arundhati Bhattacharya said the approach of collaborating with global players will enable the banks in general and SBI, in particular, to find an alternate solution for resolution of stressed assets. She also said that such an approach will be more acceptable to both the lenders and the borrowers in cases where the promoters are not able to infuse funds and lenders are reluctant to take the additional exposure. Indian banks, particularly public sector banks, are burdened with a surfeit of bad loans. PSU banks’ gross NPAs almost doubled last fiscal to Rs.4.77 lakh crore.
