Essar headquarters
Employees walk past an Essar Group logo outside the company headquarters in Mumbai in this 2013 file photo. REUTERS/Vivek Prakash/File Photo

State Bank of India is selling its huge loan exposure to Essar Steel, even as roadblocks delayed the resolution of Essar Steel insolvency case.

The bank has set an aggregate reserve price of Rs 9,588 crore for the dues running into Rs 15,431-crore. As per the credit recovery plan agreed alongside the takeover of the company by ArcelorMittal, SBI should get a minimum recovery amount of Rs 11,313.42 crore.

SBi said in its auction website that asset reconstruction companies, non-banking finance companies as well as banks and financial institutions can make bids.

SBI is the largest lender to Essar Steel, which has run up a mammoth debt of Rs 49,000 crore. In October last year, the Supreme Court gave the go ahead to ArcelorMittal to bid for Essar Steel on condition that it will pay off the creditors.

As per ArcelorMittal's resolution plan, it will pay as much as Rs 42,000 crore to the banks, while an additional Rs 8,000 will be earmarked for capital expenditure.

In October last year, the committee of creditors (CoC) also approved the of handing over of Essar Steel to ArcelorMittal.

Shareholders and vendors object

However, suits filed by Essar Steel shareholders and vendors who supplied goods and services to Essar Steel landed up at Ahmedabad Company Law Tribunal (NCLT), slowing the resolution process.

Essar Steel Asia Holdings, which holds 72 percent of shares in Essar Steel, and Standard Chartered Plc have also objected to ArcelorMittal's proposal.

The National Company Law Tribunal is scheduled to issue an order on the petitions before January 31.

Essar Steel was among a dozen companies that the Reserve Bank of India (RBI) had identified for insolvency proceedings in 2017. These companies had contributed a quarter of bad loans of Indian lenders. Essar's remains one of the largest insolvency cases with a debt of over Rs 40,000 crore.