RBI withdrew a portion of its earlier statement in which it had said that 12 cases identified by it for insolvency proceedings would be accorded priority by the National Company Law Tribunal (NCLT) “stands deleted”.
The banking sector is saddled with non-performing assets (NPAs) of over Rs8 lakh crore, of which Rs6 lakh crore is with public sector banks. The Reserve Bank had set up an Internal Advisory Committee (IAC), comprising a majority of its independent board members, to advise it with regard to the cases that may be considered for reference for resolution under the IBC.
Yesterday, the finance ministry has asked banks to maintain zero tolerance against bad loans and be prepared to fight cases to resolve large NPAs or non-performing assets although the Gujarat High Court has stayed bankruptcy proceedings against Essar Steel.
Bankruptcy proceedings have also been moved against Bhushan Steel, Electrosteel Steels and Lanco Infratech which are among the 12 bad loan cases identified by the RBI. SBI is the lead banker to defaulters of Bhushan Steel, Essar Steel and Electrosteel Steel, while IDBI Bank has been directed by RBI to initiate insolvency procedure against Lanco Infratech.
Once a case is referred to NCLT, there is a 180-day timeline to decide on a resolution plan though 90 days can be given in addition. If a plan is not decided, then the company will go into liquidation.