• Banks have shown interest In keeping the NPAs (Non-performing Assets) out of court.
  • Banks also feel that if the Regulator approves a restructuring plan at 60-66% then the accounts could be kept out of Insolvency and Bankruptcy Code (IBC)
  • This means RBI should initiate actions to revise their Circular dated 12th Feb 2018 which relates to out of court resolutions.
  • In a recent meeting with the Governor, the Bank executives suggested that the 100% vote needed to approve the plan on a restructuring of a loan to prevent an account being referred to initiate insolvency process be reduced to 60-66%.
  • Further, Banks have requested for an eight months, instead of the current 180 days to try and try a Bad loan before it is referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). This relates to accounts worth Rs. 2000 crore or more.
  • The December 13 meeting was attended by the Chief of the following banks:
    1. State Bank of India
    2. Punjab National Bank
    3. Union Bank of India
    4. IDBI Bank
    5. Central Bank of India and
    6. Dena Bank
  • As of now all lenders in a consortium should agree to a restructuring plan if an account is required to be kept away from the insolvency process.
  • The February 12 circular reads that any restructuring done outside NCLT must have approval of 100% of banks. Even in the earlier Joint Lenders’ Forum it was 75% later brought down to 60%
  • The said circular also had withdrawn all existing debt restructuring schemes for stressed accounts.


Author: Admin Bankedge

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