Tata Steel has emerged as the highest bidder for Bhushan Steel with a surprise bid of Rs 35,000 crore. JSW Steel, which was the favourite till the end of the race, was second placed with a bid of Rs 29,700 crore.

A senior bank executive aware of the development confirmed the allotment to Tata Steel and the bid amount.

Bhushan Steel is one of the 12 large corporate accounts identified by the Reserve Bank of India that accounted for almost 25 percent of exposure to bad loans for the entire banking sector.

The Neeraj Singal-led company had accumulated debt of over Rs 50,000 crore, of which bank dues amounted to around Rs 44,000 crore.

“We are happy with bid offer and this is a good sign. We have provided over 50 percent. The haircut is about 35 percent,” the banker said.

An announcement may be made later tonight, or tomorrow, another source from the industry added.

The development follows a meeting between the lenders of Bhushan Steel and the resolution professional earlier in the day today. According to reports, the liquidation value of Bhushan Steel stood at Rs 15,000 crore.

Tata Steel and JSW Steel had submitted their bids on February 3. Initially, Tata Steel's bid was said to close to Rs 24,000 crore.

State Bank of India has one of the largest exposures to the debt-laden company at around Rs 6,000 crore, including external commercial borrowings. Other lenders include Canara Bank, Bank of India and Dena Bank.

In a consortium of 51 lenders, PNB is the lead banker for term loans to Bhushan Steel. SBI heads the consortium for working capital loans.

The company tried restructuring its debt under the RBI’s 5/25 refinancing scheme and S4A (Scheme for Sustainable Structuring of Stressed Assets). However, after failure to make any headway, the central bank referred the case to be resolved under the Insolvency and Bankruptcy Code.

While a source in the industry confirmed the development, officials from Tata Steel were couldn't be reached. Calls to its corporate communication executive went unanswered.