A consortium of lenders led by State Bank of India (SBI) has decided to fund Baba Ramdev-led Patanjali’s acquisition of bankrupt Ruchi Soya. Among the lenders, SBI and Punjab National Bank (PNB) already have debt exposure of over Rs 2,500 crore to Ruchi Soya.The debt-ridden firm had landed in front of the National Company Law Tribunal in December 2017, when the bankruptcy tribunal accepted the application of creditors Standard Chartered Bank and DBS Bank and initiated the insolvency resolution process.

After months of bidding, the tribunal approved Patanjali’s Rs 4,350 crore resolution plan earlier this year. However, Rs 3,200 crore of this is to be funded by debt raised from “a consortium of banks led by State Bank of India,” Patanjali Ayurved Managing Director Acharya Balkrishna has said. Patanjali will borrow Rs 1,200 crore from SBI, Rs 700 crore from PNB, Rs 600 crore from Union Bank of India, Rs 400 crore from Syndicate Bank and Rs 300 crore from Allahabad Bank.

SBI has the highest exposure to Ruchi Soya at Rs 1,800 crore, followed by Central Bank of India (Rs 816 crore), PNB (Rs 743 crore), Standard Chartered Bank India (Rs 608 crore) and DBS (Rs 243 crore). The FMCG major has a total debt of Rs 12,000 crore.

“Earlier, banks did not lend for takeovers… However, these are different times. Both IBC and RBI norms have changed. Technically, a bank can now lend money to take over a sick firm to which it had lent money to earlier,” said Sanjay Bhattacharyya, former MD of SBI.

Loans written off
The loans of SBI and PNB to Ruchi Soya will be partially written off after the insolvency resolution is completed