New Delhi, Mar 30 (KNN) Agitated over protection given to the steel industry in the country, an industry body has said that the current state of the steel industry, having stressed assets, is mainly because of the loans given to them by the PSBs were diverted into some other activities rather than manufacturing steel.

The Apex Chamber of Commerce & Industry (ACCI), Punjab, has written a letter to Finance Minister Arun Jaitley urging the government to substantially reduce the “content of protection given to few steel players”.

The industry body pointed that the Chairman of a Public Sector Bank in India is empowered to lend up to Rs 400 crores on their own, which earlier was Rs 100 crores.
“It is also in the public knowledge that steel companies have paid much more attention to other activities and less to the core functions. This diversion of attention and funds is against the banking norms in general,” said ACCI.

The association said that the Banks are supposed to scan the borrowers’ accounts minutely in order to avoid diversions.

“These reasons are responsible for the stressed assets of steel companies. It is also a fact that some of these companies are even faulting on External Commercial Borrowings (ECB), which is a serious matter,” said the Punjab association.

The letter was written in the backdrop of duties imposed by the government on steel import.

Government is trying to protect the main steel producers of this country by hiking import duty by 5% (August 2015), imposing minimum import price on 173 steel products, levying 20% provisional safeguard duty on hot roll coil and imposed antidumping duty on import of hot roll coil steel.

“These steps were taken only to protect the few main steel producers at the cost of steel users across board,” said P D Sharma, President, ACCI.

This was done primarily to protect the banks that have very large exposure to main steel producers in the country, he added.