RBI Wields The Stick On NPAs: Congress Leader’s Firm First To Face Bankruptcy Action

IDBI Bank has started insolvency resolution process against Lanco Infratech as part of Reserve Bank of India (RBI)'s renewed effort to tackle the mounting Non-Performing Asset (NPA) challenge. RBI had identified 12 other large borrowers, and these cases are likely to be taken up by State Bank of India and other banks later this week.

As of 31 March 2016, IDBI Bank is reported to have fund-based exposure of Rs 7,799 crore and non-fund based exposure of Rs 3,349 crore, while the overall dues from the company are over Rs 17,000 crore.

Lanco Group was founded by Lagadapati Rajagopal, a two-term Congress Member of Parliament from Vijayawada constituency.

Rajagopal had gained notoriety for spreading pepper spray and causing adjournment of Lok Sabha. He was attempting to stall the proceeding of the house during the introduction of the bill for separate statehood for Telangana.

Rajagopal is the son-in-law of veteran Congress leader P Upendra. His business empire witnessed a meteoric rise in the 1990s. Upendra had shifted allegiance from Telugu Desam Party to Congress during that time.

At one point in time, Lanco was the country’s largest independent power producer with a generation capacity of 3.3 GW.

Lanco Infratech had acquired Griffin Coal mines located in Australia in 2011 for $ 800 million. The acquisition resulted in losses of over Rs 2,000 crore, and the company was saddled with a debt burden of Rs 6,200 crore.