RBI identifies 12 accounts responsible for 25% of bad loans

Twelve accounts, each having more than Rs 5,000 crore of outstanding loans, accounts for as many as 25 per cent of the current gross non-performing assets (NPAs) of the banking system as of March 31, 2016. This was revealed by the Reserve Bank of India (RBI) yesterday.

All these identified accounts are eligible for immediate reference for proceedings under the Insolvency and Bankruptcy Code (IBC) as per the recommendation of the Internal Advisory Committee (IAC) of the RBI.

“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,” read a RBI statement.

- Advertisement - - Article resumes -

Without naming the defaulters, the RBI said the banks will be asked to initiate insolvency proceedings to recover the dues.

“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 RBI said.

Though the RBI did not disclose the names of the defaulters, reports suggest that borrowers such as Bhushan Steel, Essar Steel, Lanco, and Alok Textiles may be the first set of companies facing proceedings under the stringent recovery laws.

The IAC explored 500 top exposures of the banking system and has recommended for bankruptcy proceedings 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. Of them, 12 accounts were referred immediately under Insolvency and Bankruptcy Code.

So far 81 cases of bad loans have been referred to NCLT. Out of the 81 cases, 18 were referred for bankruptcy by their creditors. NCLT is the arbitration authority for cases filed under IBC.

“The IAC 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 RBI statement said.

Earlier Finance Minister Arun Jaitley had said that RBI was at an advanced stage of drawing up the list of bad loan cases to be referred to the National Company Law Tribunal (NCLT) for bankruptcy proceedings and the number of cases going for bankruptcy resolution would rise once the RBI draws up the list.

Last week, RBI deputy governor NS Vishwanathan had said, “We have decided to focus on a few large stressed accounts under this framework and accordingly a set of accounts has been identified, based on objective criteria.”

As reported earlier, private sector banks continue to hide a large chunk of stressed assets. There is a huge mismatch between the Reserve Bank of India (RBI) estimation and respective private bank’s own estimation of stressed assets as the private banks under report the non-performing assets (NPAs) figures. This has come to the light during the audit by the central bank.

Bad loans have increased over the years, thanks to the wilful defaulters, bleeding the Indian economy. According to available data, private sector banks have been jostling with stressed assets of a staggering Rs 10 lakh crore as of December-end. Similarly, the stressed assets of public sector banks are pegged at a whopping Rs 6.07 lakh crore till December end. Central bank had earlier stated that stress was coming from sectors such as power, telecom, steel, textiles, and aviation.

According to a report by S&P Global ratings, the stressed assets of Indian banks are likely to increase to 15 per cent of the total loans by March 2018 amid rising requirements for regulatory capital until 2019.

The Union Cabinet, on 3 May, had approved promulgation of an Ordinance to amend the Banking Regulation Act, which gives wide ranging powers to the RBI to initiate insolvency proceedings for the recovery of bad loans.


Share This Post and Support:
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.


Most read articles recently

AAP Candidate for Gautam Budh Nagar disqualified

AAP candidate for Gautam Buddh Nagar disqualified for failing to arrange 10 persons to back her nomination

As the AAP is not recognised as a national party by the EC, their candidate has to arrange a minimum of 10 people as proposers at the Returning Officer's office to back her nomination.

Actor R Madhavan offers support to PM Modi to urge voters to cast votes in elections, gets trolled by ‘liberals’

Because of their sheer bitterness for Modi, these cynics are in no mood to spare anyone who comes out in support of Modi
Tejaswi Surya attacked for Ayudha Puja

Congress IT cell attacks BJP’s Bangalore South candidate for performing Ayudha Puje as per Hindu rituals

Ayudha Puje is one of the widely celebrated festivals in India which falls during the Navratri

NC Lok Sabha candidate Akbar Lone begins a rally with ‘Pakistan Zindabad’, says will abuse anyone who abuses Pakistan

Akbar Lone, NC Lok Sabha candidate for Baramulla, said that the country across is a Muslim country and abusing Pakistan would mean he is abusing himself

Congress-friendly journalist tries to shield Dynasty, but Rahul Gandhi spoils the party by pulling a Rahul

Even though journalist Pallavi Ghosh sends out feelers to Congress President, he goes ahead and does completely the opposite.
Owner of AAP propaganda blog agitated when Sushma Swaraj stands up for two underage Hindu girls

AAP propaganda site owner gets angry after India expresses concerns over atrocities against Hindus in Pakistan

Sushma Swaraj's move to seek details of the Incident had agitated quite a few people in Pakistan, including their Information and Broadcasting minister Ch Fawad Hussain, who saw it as an intervention in Pakistan's internal matters.

Where is the money? Rahul Gandhi’s promise is going to cost a whopping Rs 3.60 lakh crore a year, 13% of union budget

Minimum Income Guarantee Scheme of Congress party ensures monthly income of Rs 12,000 for 20% of India's population

Rahul Gandhi’s Minimum Income Guarantee could kill all other subsidies and be the mother of all scams

Remember, India’s worst-case scenario is also the Dynasty’s best case scenario.

Facebook arbitrarily suspends account of activist Anshul Saxena, fails to restore account despite no wrongdoing

The social media giant, Facebook, has allegedly resorted to arbitrarily suspending the account of social media user Anshul Saxena
Malala has maintained a conspicuous silence over atrocities on Hindu girls in her country

Nobel Peace Prize winner Malala’s silence on abduction and forceful conversion of two Hindu girls is deafening

Malala, who often preaches the world about feminist adventures and jumps in to display her intellect over human rights issues especially against women across the world seems to have not found her voice to condemn the bigotry of Pakistanis as she could face severe backlash within her own country.

Latest articles

Connect with us

149,336FansLike
120,885FollowersFollow
31,575SubscribersSubscribe

Don't miss these


Share This Post and Support: