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If these debts are not resolved through RBI’s schemes by December 31, then creditors must move against the defaulting companies under the IBC code at the NCLT before December 31, orders RBI

Two months after it asked banks to initiate insolvency proceedings against 12 top defaulters in the country, the Reserve Bank of India (RBI) has now sent various commercial banks – chief among them being the State Bank of India (SBI) – a list of 26 defaulters classified as non-performing assets.

The RBI wants these commercial banks to start the process of debt resolution with these defaulters before initiating bankruptcy proceedings.

The central bank, in a letter, said these accounts should be examined and debt resolution or insolvency proceedings should be carried out in accordance with RBI schemes before December 31. In case of non-resolution, cases should be filed against the defaulting companies under the Insolvency and Bankruptcy Code (IBC) at the National Company Law Tribunal (NCLT), the RBI has reportedly said in its communique to the creditors.

The NCLT, set up on June 1, 2016, is the adjudicating authority for IBC cases.

It is learnt that each commercial bank has received a separate list of defaulting companies where it has an exposure. Although the total size of the borrowings is not known, these loans are expected to add up to close to one-third – a staggering Rs 1 lakh crore by some estimates – of all non-performing assets.

According to bankers, the companies whose names have been circulated by RBI include big players in the power, telecommunications, steel and infrastructure sectors like Videocon, Jaiprakash Associates Ltd (JAL), Uttam Galva and Monnet Power.

The RBI stated that these are accounts where 60% of the outstanding amount was classified as non-performing on the books of banks as of June 30.

“We have no comment to offer as JAL’s resolution plan was approved on June 22 by JLF (joint leader’s forum),” Jaypee Group chairman, Manoj Gaur was quoted as saying by the media.

Meanwhile, shares of Videocon Industries have plunged 82 per cent in 2017 – going from Rs 103.90 on December 30, 2016 to Rs 18.10 on August 29 – as compared with the 17.88 per cent jump in benchmark BSE Sensex.

The RBI, in June, identified 12 large loan defaulters who account for 25 per cent of the total NPAs in the banking sector. These included Essar Steel, Bhushan steel, ABG Shipyard, Electrosteel and Alok Industries. The RBI had sought immediate bankruptcy proceedings against these companies following which, with the exception of Era Infra Engineering Ltd, all 11 cases were admitted by NCLT.

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