The Reserve Bank of India on Tuesday identified 12 accounts – each having more that Rs 5,000 crore of outstanding loans and constituting 25 percent of the total non-performing assets (NPAs) of banks – for immediate resolution under the Insolvency and Bankruptcy Code.
The central bank, without naming the accounts, said that the lenders would be asked to initiate insolvency proceedings against all accounts with an outstanding amount greater than Rs 5,000 crore with 60% or more classified as non-performing by banks.
RBI also informed that the Internal Advisory Committee (IAC) has arrived at an objective, non-discretionary criterion for referring accounts for resolution under the Insolvency and Bankruptcy Code (IBC).
“In particular, the IAC recommended for IBC reference of all accounts with fund and non-fund based outstanding amount greater than Rs 5,000 crore, with 60 per cent or more classified as non-performing by banks as of March 31, 2016,” the RBI said.
Once the process is initiated, banks will have to dissolve the existing board of the company and appoint a professional who will be entrusted with the task of coming up with a workable solution for the company so that it can repay its loans. The professional will initially get 180 days which can later be extended to 90 more days. A liquidator would be appointed if the company fails to come up with a solution within the 270 days.
The banking sector is saddled with NPAs worth over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSB).