SBI, banks gave defaulting Sterling owners `1,300 crore guarantees

NEW DELHI: State Bank of India's (SBI) loan sanction process to a subsidiary of debt-laden pharmaceutical company Sterling Biotech has come under a cloud, according to a report in DNA website. A consortium banks led by the SBI provided guarantees of Rs 1,298.10 crore to Sterling Biotech's overseas oil subsidiary when the promoters of the company Nitin Sandesara, Chetan Sandesara, Dipti Sandesara and Hitesh Patel were already in the Reserve Bank of India's (RBI) wilful defaulters' list, the DNA report added.

Two domestic companies, Sterling Biotech and Sterling SEZ & Infrastructure Ltd, had unpaid dues of Rs 15,500 crore to a clutch of domestic banks. The guarantees were in the form of Standby Letter of Credit (SBLC), which the SBI said was to secure the stressed domestic loan, the DNA website said.

The RBI, which probed these loans sanctioned to Sterling, observed that the company may have round-tripped the funds to the SBI to make their accounts standard temporarily. The guarantees helped the Sterling promoters to raise money abroad, RBI observed, according to DNA.

However, the central bank did not respond to a detailed questionnaire sent by DNA Money despite repeated reminders, DNA added.

The guarantee was extended in September 2015 to Sterling Global Oil Resources Ltd (SGORPL), which is the overseas subsidiary of the Sterling group that operates an oil field in Nigeria. The money was to be utilised to set up infrastructure for undertaking exploration, production and evacuation activities in the oil business and the cash flows were to serve as a security for the domestic loan, the DNA report noted.

As of now, Sterling Biotech owes over Rs 7,500 crore while its sister concern, Sterling SEZ, has an outstanding dues worth Rs 8,100 crore to a consortium of banks. The banking regulator had asked SBI to escalate the matter to the board.