The ghost of Videocon continues to haunt banks

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Editor's note: The government’s plan to privatize IDBI Bank hinges on its ability to sell the lender’s remarkable turnaround story to prospective investors. The bank is on track to record its third straight year of profits after a stretch of four years, during which it suffered losses adding up to over Rs 40,000 crore. The slate, one would think, has been cleaned, allowing the government to start the disinvestment process earlier this week. But there’s an overhang. That of Videocon Industries Ltd, the once profitable business owned by Venugopal Dhoot, which entered the bankruptcy process in 2018. Of VIL’s Rs 62,000 crore debt, a large chunk—Rs 9,917 crore—is from IDBI Bank. It accounted for 20% of IDBI Bank’s non-performing asset book as of 2018-19.  In the last four years, the bank has been able to recover just Rs 250 crore of that debt, which came from the sale of a warehouse in Poland that was provided as security by a step-down subsidiary of VIL’s. That is the only asset that IDBI Bank has been able to get its hands on till now, …