PC Jeweller Faces Bankruptcy as SBI Moves to Recover Defaulted Loans

NEW-DELHI: The State Bank of India (SBI) has initiated bankruptcy proceedings against PC Jeweller in the National Company Law Tribunal (NCLT) Delhi. The move comes after the company's failure to repay loans, amounting to approximately Rs 3,466 crore, obtained from multiple banks.

The Bankruptcy petition was filed on July 26 and was presented before the Principal Bench of NCLT Delhi. The case has been adjourned for the next hearing, scheduled for the first week of August.

PC Jeweller encountered financial difficulties in February 2023, when several banks decided to recall the loans extended to the company. As per the filing, PC Jeweller defaulted on loans worth Rs 3,466 crore obtained from various banks and financial institutions. In response to this revelation, the concerned banks took the decision to recover the outstanding loan amounts.

Loan recall is a customary process wherein the lender formally requests the borrower to return the borrowed funds. Typically, lenders resort to loan recall when they perceive that the borrower's financial position has deteriorated significantly, leading to concerns regarding repayment capabilities.

In its annual report for the financial year 2021-22, PC Jeweller disclosed borrowing from 14 banks, including SBI, Indian Bank, Union Bank, and Punjab National Bank. As per the annual report, the company's debt to these banks, inclusive of interest and principal amounts, stands at Rs 3,278 crore. SBI emerges as the company's largest lender, with an outstanding balance of Rs 1,060 crore. Additionally, PC Jeweller owes Rs 530 crore to Union Bank of India, Rs 478 crore to Punjab National Bank, and Rs 226 crore to Indian Bank.

The bankruptcy petition against PC Jeweller marks a significant development in the company's financial crisis. The case will now be closely monitored by the NCLT Delhi, with the next hearing set to determine further actions regarding the defaulting company.