Resolve 55 high-value cases of bad loans in 6 months or face IBC: RBI to banks

RBI has asked banks to find solution for 55 identified NPA accounts within 6 months otherwise the central bank would examine those cases and refer for resolution under the Insolvency and Bankruptcy Code (IBC), official sources said.

By: PTI | New Delhi | Published:June 22, 2017 6:46 pm
RBI NPA, RBI non performing assets, RBI Banks NPA, RBI NPA Banks, Reserve Bank of India, RBI, RBI news RBI is of the view that banks should expedite the NPA resolution process for these cases as soon as possible, the sources said.

The Reserve Bank of India has asked banks to resolve 55 high-value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as part of the strategy to rein in an unacceptable level of non-performing assets (NPAs). Earlier this month, Reserve Bank of India identified 12 accounts for insolvency proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting for 25 per cent of total NPAs of banks. RBI has asked banks to find solution for 55 identified NPA accounts within 6 months otherwise the central bank would examine those cases and refer for resolution under the Insolvency and Bankruptcy Code (IBC), official sources said.

RBI is of the view that banks should expedite the NPA resolution process for these cases as soon as possible, the sources said. In cases where a viable resolution plan is not agreed upon within six months, banks would be asked to file insolvency proceedings against the defaulters under the IBC, sources added. The banking sector is saddled with NPAs of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSBs). The 12 identified cases account for 25 per cent or about Rs 2 lakh crore of NPAs.

IBC has defined time-frame for the resolution and there is 14-day time period for admission or rejection of a case by National Company Law Tribunal. After a case is accepted by NCLT, the creditor would get 30 days to hire insolvency practitioners and then the entire process to be completed in 180 days which will look at various possibilities including revival of projects or liquidation.

RBI had set up an Internal Advisory Committee (IAC) for such cases that may be considered for reference for resolution under the IBC, under which the 12 accounts were identified with fund and non-fund based outstanding amount greater than Rs 5,000 crore as of March 31, 2016.

These measures were announced by RBI following an ordinance giving it wide-ranging legislative powers to fight NPAs. The ordinance authorised RBI to issue directions to banks to initiate insolvency resolution process in the event of a default under the provisions of IBC. RBI has been equipped with powers to specify one or more authorities to advise banks for dealing with the problem of NPAs which, as per the Ordinance, “have reached unacceptably high levels and urgent measures are required for their resolution”.

The law will also empower RBI to set up sector related oversight panels that will shield bankers from later action by probe agencies looking into loan recasts. RBI has expanded the oversight committee by appointing three more members to the high-level panel that will vet the process to resolve mounting bad loans bogging down the banking sector.

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  1. A
    ams
    Jun 23, 2017 at 12:55 am
    Urjit Patel is losing his job just as Rajan did. Govt does not want RBI to act on big loan defaulters. Rajan was aggressive in this area (And of course BJP let its pet dog Subramaniyam Swami loose on him) . Patel is meeting same fate.
    Reply
  2. K
    KS KUMAR
    Jun 22, 2017 at 9:40 pm
    This is the cumulative sins of Chidambaram and PMO
    Reply
  3. Y
    yousef
    Jun 22, 2017 at 8:30 pm
    Caste wise loand dispersal and subsequent waivers is a political next in thing. Ramdas Athavle is already asking for this. Good buy banking.
    Reply
  4. M
    M.P.Rao
    Jun 22, 2017 at 8:27 pm
    Astronomical figures are quoted as bad loans.The way the figures are doled out now and then show the political class ruling the country,the bureuocrates,the top bosses of the banking sector were sleeping like Rippanwinkles.With eight lakh crores as bad debts, God only knows how this tax payers money can be got back
    Reply
  5. I
    Indian
    Jun 22, 2017 at 8:15 pm
    The BANKERS who gave the loans also should be thrown in Jail.
    Reply
  6. S
    S Srinivasan
    Jun 22, 2017 at 7:43 pm
    The whole drama will continue for some time and then forgotten.The promoters of the bad enterprises must have siphoned off the money in safe havens and part of the loot must have gone to the erstwhile national party. The ultimate sufferers are public and they have to bear the burden in the coming years. Politicians as usual get increased ry,perks and loot the nation in the best possible way they know.If Modi sarkar is sincere,let them stifle the Congress,the opposition parties and most importantly Babus who assisted the politicians all through these years.
    Reply
  7. L
    l s
    Jun 22, 2017 at 7:14 pm
    After this, the top bank officials should also be arrested and jailed for their involvement in looting during demonitisation. Only then citizens will have confidence in RBI and the Finance Ministry.
    Reply
  8. T
    Trun
    Jun 22, 2017 at 7:06 pm
    Tomorrow make sure you buy bank stocks as sure shot to make money.
    Reply
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