RBI Directed Banks to Transfer Stressed Accounts to NCLT

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  • Reserve Bank of India had asked Banks either to resolve the 28 Stressed Accounts that the regulator (RBI) had identified in its second list or to handover them to the National Company Law Tribunal (NCLT).
  • In compliance of RBI’s order the Banks are all set to transfer 23 out of 28 stressed accounts to the NCLT.
  • The move has been taken by the Banks after the end of the RBI’s deadline of 13th December, 2017.
  • These 28 accounts together are 40 percent of bad loans of around Rs. 4.0 Trillion.
  • Some of the large accounts which have been referred to the NCLT include Asian Color Coated Ispat, Castex Technologies, Coastal projects, East Coast Energy, IVRCL, Orchid Pharma, SEL Manufacturing, Uttam Galva Metalic, Uttam Galva Steel, Visa Steel, Essar Projects, Jai Balaji Industries, Monnet Power, Nagarjun Oil Refinary, Ruchi Soya Industries and Wind World India.
  • Many Bankers told that they had asked for the extension of the deadline of 13th December, but they didn’t expect the RBI to oblige.
  • Once these accounts pass the deadline set by RBI, Banks will have to refer them to the NCLT in the next 18 days i.e. 31st December, 2017.
  • It is noted that out of 12 large accounts that RBI had named in the list released in the June, 2017, 11 of them are already under NCLT.
  • These 12 accounts were worth the over Rs. 2.5 Trillion of loans in the system.
  • Now the banks would require to set aside an additional Rs.10000 Crores as provisions for accounts in the Reserve Bank of India’s second List provides the same for 23 accounts which are referred to NCLT by banks.

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