RBI has asked banks to resolve 55 high value cases of bad loans within six 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 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 ₹5,000 crore of outstanding loans, accounting for 25% 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.
‘Speed up the process’
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 ₹8 lakh crore, of which ₹6 lakh crore is with public sector banks (PSBs). The 12 identified cases account for 25% or about ₹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.
