Calcutta: Promoters of large companies that stumble on debt repayments and compound the bad loan crisis in the banking industry must learn to jettison the old-world notion that they have a "fundamental birthright" to manage the affairs of the enterprises they created.

In an exclusive interview with The Telegraph, State Bank of India chairman Rajnish Kumar said "existing promoters need to come out of the mindset that existed prior to the implementation of the insolvency and bankruptcy code (IBC) whereby they believed they have a fundamental birthright over an enterprise".

Kumar's statement takes on a significance as the clock starts to wind down on the 270-day deadline for bankruptcy resolution at the 12 large corporates that were referred to the national company law tribunal in July last year.

"You have a right of control over the enterprise till such time as you manage it well. If there is proof that you cannot manage it well, then you cannot continue to assert your fundamental right over the enterprise. That is the situation today and you need to accept that reality," he added.

Although the SBI chairman took no names, the blunt comment from the straight-talking banker is a sort of coded message to the Ruias - owners of Essar Steel - who have been desperately trying to fight off rivals circling the stricken steelmaker like Lakshmi Mittal of ArcelorMittal, Anil Agarwal of the Vedanta group and the Jindals.

Essar Steel owes Rs 49,212.56 crore to 55 financial creditors including a clutch of India's leading banks.

The Ruias have already failed a litmus test of eligibility after the resolution professional overseeing the affairs of Essar Steel ruled against a bid filed by a Russian-led consortium called Numetal that included Rewant Ruia, son of Essar group founder Ravi Ruia.

The Ahmedabad bench of the national company law tribunal (NCLT) has since allowed ArcelorMittal - which was also disqualified in the first round - to participate in a fresh bidding process along with Numetal after modifying their bids to meet eligibility criteria.

"No final decision has been taken. So, we have to wait for the decision of the committee of creditors (CoC). There are different points of view. Either we will abide by the order of the NCLT or, if the CoC decides not to do so, then it will appeal to the appellate tribunal and abide by its order. If you are not satisfied by the NCLAT order, then (we could) go the Supreme Court and abide by that order," Kumar added.

The SBI chairman said that the tough asset classification rules framed by the Reserve Bank of India had forced banks to clean up their balance sheets last year, causing a great deal of pain in the industry.

"Last year was a year of despair. This year, I will call it the year of hope," Kumar said, adding that he wasn't unduly perturbed by the slow pace of bankruptcy resolution.

"I don't think that the 270-day deadline (for resolution of IBC cases) is unrealistic ... It is a new law; a lot of judicial interpretations and other issues are cropping up. And that is why it is taking more time. But once the law gets settled, then the pace will probably quicken," he said.

The buzz today is over the haircuts (basically the amount that the banks are ready to forgo). But Kumar is clearly less sympathetic towards the tenacious attempts that some promoters are making to hang on to their fiefs - by even offering to pay their overdues.

"Section 29A of the IBC says that if you are a defaulter for more than a year and then if you want to participate in the resolution process, (you must) pay and clear the overdues. I think it is a very fair and reasonable demand to make. Now the question arises, if somebody is saying that I am ready to pay you 100 per cent, then (I will respond) why didn't you pay 12 months back? Why did you bring the enterprise and the bankers to this situation? So, it is about intent also," said the chairman of SBI which has an admitted claim of Rs 13,199.42 crore against Essar Steel.

The SBI believes that everyone, including the media, is obsessing too much over the haircuts that the banks are expected to take in the high-profile bankruptcy cases. "No one is examining the qualitative aspects of the bankruptcy resolution," Kumar said.

He admitted that bankers had started to show greater faith in the NCLT-led process because the judicial process would quell disquiet among bankers over post-facto vigilance inquiries into the haircuts.

"In an NCLT situation, where the judiciary is examining all the resolution plans and putting its stamp of approval or disapproval, that process will provide greater protection and comfort to the banks. But at times, outside the NCLT process, you can have enhanced recovery. But there is a fear that you could still be questioned. Banks would prefer that the decisions are taken by the NCLT process," Kumar added.