SBI Negotiates With Mumbai Metro One Even As Insolvency Looms

The State Bank of India is seeking to resolve its debt issues with Mumbai Metro One Ltd., even as India's largest lender has initiated insolvency proceedings, a person with direct knowledge of the matter said.

The state-run bank has submitted a petition against the metro rail firm at the Mumbai bench of the National Company Law Tribunal and is currently awaiting admission. While the insolvency proceedings can continue, SBI is also in discussions with the management team of Mumbai Metro One for a bilateral settlement, the person mentioned above said.

Mumbai Metro One, which operates Mumbai's first metro line between Ghatkopar and Versova, is a joint venture of Reliance Infrastructure Ltd. (74%) and the Mumbai Metropolitan Region Development Authority (26%).

Through its petition, filed under Section 7 of the Insolvency and Bankruptcy Code, SBI is seeking to recover dues worth Rs 416 crore, Reliance Infrastructure said in a filing to the exchanges on Aug. 2.

"The financial implication for the company cannot be ascertained and is contingent upon the final outcome of said proceedings and subsequent legal challenges," the infrastructure company said in its filing, adding that it is seeking legal advice.

Other lenders to the metro rail company include Canara Bank, Indian Bank, Bank of Maharashtra, IDBI Bank Ltd., and India Infrastructure Finance Co. (UK).

Mumbai Metro One has seen cost overruns over the years and has faced financial pressures due to the lack of viability gap funding by the state. MMRDA's attempts to buy out Reliance Infrastructure's stake in the company have also faced difficulties as the latter does not agree on valuations.