Regstreet Law Advisors

Commercial Banking

1. RBI identifies 12 stressed accounts to be referred under IBC

Reserve Bank of India (“RBI”) vide its press release dated June 13, 2017, has identified 12 stressed accounts totaling about 25% of the current gross Non-Performing Assets (“NPAs”) of the banking system for immediate reference for resolution under Insolvency and Bankruptcy Code, 2016 (“IBC”). The action was taken in pursuance of the powers entrusted to RBI to issue directions to banks for resolution of stressed assets vide Banking Regulations (Amendment) Ordinance dated May 4, 2017 (“Ordinance”). Pursuant to the promulgation of the Ordinance, RBI had constituted the Internal Advisory Committee (“IAC”) to advice it in regard of cases that may be referred for resolution under IBC. Accordingly, IAC recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than INR 5000 crore, with 60% or more classified as non-performing by banks as of March 31, 2016.

However, at this stage IAC took up for consideration only the accounts that were classified partly or wholly as non-performing from amongst the top 500 exposures in the banking system. As regards other NPA accounts which do not qualify under the above criteria, IAC has recommended that banks should finalize a resolution plan within six months and in cases of failure, banks should be required to file for insolvency proceedings under the IBC

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