- 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:
- State Bank of India
- Punjab National Bank
- Union Bank of India
- IDBI Bank
- Central Bank of India and
- 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- The said circular also had withdrawn all existing debt restructuring schemes for stressed accounts.
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