The RBI will issue directives to banks on these large accounts
Today’s Paper : The Reserve Bank of India (RBI) on Tuesday said its internal advisory committee (IAC) had identified 12 accounts that covered about 25 per cent of the banking system’s non-performing assets for immediate resolution under the Insolvency and Bankruptcy Code.
The gross bad debt of the Indian banking system as of March was at Rs 7.11 lakh crore, which means the 12 accounts would be responsible for about Rs 1.78 lakh crore.
The central bank did not give the names of the borrowers.
The government has amended the RBI Act, giving powers to the central bank to direct banks to take punitive action against individual accounts under the Code. Earlier the central bank could give directions only on an industry basis.
The process of appointing a professional to take over the management of a company and then come out with a solution to repay loans will take a long time and may not be a workable solution, say corporate lawyers.
The process begins with the banks approaching the National Company Law Tribunal (NCLT) to appoint a professional to manage a company even as the existing board gets suspended. The professional gets 180 days to come up with a workable solution for the company so that it can repay its loans. This timeline can be extended by another 90 days. If the company fails to come up with a solution within the 270 days, a liquidator is appointed.
Banks and workers will then have to submit their claims to the liquidator. “The difference between the new code and the Board of Industrial and Financial Reconstruction is that the former has stringent timelines. Meanwhile, a promoter can move the High Court on various grounds, thus delaying the process,” said RS Loona, managing partner, Alliance Corporate Lawyers. |READMORE…