Mumbai, June 13, 2017

Reserve Bank of India has said that it has identified 12 accounts totalling about 25% of the current gross non performing assets (NPAs) of the banking system that would qualify for immediate reference under the Insolvency and Bankruptcy Code, 2016 (IBC).

Internal Advisory Committee (IAC) arrived at an objective, non-discretionary criterion for referring accounts for resolution under IBC. In particular, the IAC recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than Rs 5000 crore, with 60% or more classified as non-performing by banks as of 31 March, 2016. The IAC noted that under the recommended criterion, 12 accounts totaling about 25% of the current gross NPAs of the banking system would qualify for immediate reference under IBC, RBI said.

As regards the other non-performing accounts which do not qualify under the above criteria, the IAC recommended that banks should finalise a resolution plan within 6 months. In cases where a viable resolution plan is not agreed upon within 6 months, banks should be required to file for insolvency proceedings under the IBC, RBI added.

RBI had stated in a release on 22 May, 2017 that it would be constituting a committee comprised majorly of its independent board members to advise it in regard to the cases that may be considered for reference for resolution under IBC. An IAC was accordingly constituted and it held its first meeting on 12 June, 2017. The IAC, in the meeting, agreed to focus on large stressed accounts at this stage and accordingly took up for consideration the accounts which were classified partly or wholly as non-performing from amongst the top 500 exposures in the banking system.

The Reserve Bank, based on the recommendations of the IAC, will accordingly be issuing directions to banks to file for insolvency proceedings under the IBC in respect of the identified accounts. Such cases will be accorded priority by the National Company Law Tribunal (NCLT), the central bank said.

The details of the resolution framework in regard to the other non-performing accounts will be released in the coming days, RBI added.

[The Deccan Herald]