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‘SBI to take final call on $1-bn loan to Adani in 2-3 months’

‘SBI to take final call on $1-bn loan to Adani in 2-3 months’
State Bank of India (SBI) has said that the final decision on the controversial $1-billion (Rs 6,200 crore) loan agreement with the Adani Group for its Australian mining project would be taken by the executive committee of the bank in two-three months. SBI had last month signed the pact with the Adani Group on the sidelines of Prime Minister Narendra Modi’s visit to Australia.

“The executive committee after due deliberations will decide about the disbursement to Adani,” said State Bank of India (SBI) Chairperson Arundhati Bhattacharya. “At present, all the aspects are being studied. Appraisal is being done. It will take about two-three months to study the project and thereafter taken to the committee for final approval,” she added.

Loans of over Rs 400 crore are generally cleared by executive committee headed by the Chairperson. The other members of the executive committee include two executive directors (of the four managing directors on board) and non-executive director/directors who are present in the city where the meeting is held. Besides, Reserve Bank nominee director Urjit R Patel (RBI Deputy Governor) is a part of the executive committee.

Adani Mining is building a 300-km rail line for its about $16 billion Carmichael coal mine project in Australia. The development of the coal mine located at Queensland in Australia and required infrastructure including railways would cost $7.6 billion.

Queensland state’s Coordinator General has approved $2 billion (Australian $2.2 billion) rail line project called the North Galilee Basin Rail (NGBR) that would link Adani’s Carmichael Coal Mine with Abbot point coal terminal. The Opposition Congress had raised concerns over SBI’ the $1-billion loan pact with Adani Group signed during Prime Minister Narendra Modi’s visit to Australia.

“What was the propriety of the SBI giving the loan to Adani, who was sitting next to Prime Minister during the visit, at a time when some five foreign banks have denied credit to the group for the project?” said Congress General Secretary Ajay Maken.  Bhattacharya had clarified the bank had just signed a memorandum of understanding. “This is not a loan sanction that we have given. It will go through proper due diligence both on the credit side as well as on the viability side... The board will take a call and then only loan will be given,” she had said.

Meanwhile, global brokerage firm Morgan Stanley said that the RBI is expected to lower policy rates by 50 basis points in 2015 with the first rate cut likely as early as February next year on the back of slowing inflation. The report said the magnitude of rate cuts would depend on the trajectory of inflation, which is expected to reach 6 per cent level on a sustained basis by March 2015.

“In our base case, we expect inflation to reach the 6 per cent level on a sustained basis by March 2015 (same as the RBI’s expectation). We therefore assume 50 basis points policy rate cuts in 2015 in our base case,” Morgan Stanley said in a research note. “We believe that the first rate cut is likely to be in February / March 2015,” the report added. 
PTI

PTI

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