INSUBCONTINENT EXCLUSIVE:
accommodative approach towards resolution of stressed assets when it issues a revised circular sometime in the next few days, against the
February 12 circular quashed by the Supreme Court.Sources said the major contention in the controversial February 12, 2018, circular that
identify and qualify an account as bad debt and also be given more time to resolve the same.The Reserve Bank of India is likely to retain
the main contours of its February 12, 2018 circular while making the referral to National Company Law Tribunal (NCLT) non-compulsory,
classification of Non-Performing Asset (NPA) and resolution of bad assets.Bankers had suggested qualifying a loan as bad debt if the default
after that, according to the bankers.Moreover, it had suggested a 60 day incubation period post this time for identifying the default
After this, banks would resolve a case within 180 days and consider referring the case to NCLT post that period if the majority of the
lenders agreed.On Tuesday, the Supreme Court struck down a February 12, 2018 circular of the RBI that asked banks to initiate insolvency
process against companies even if there was a day's delay in payment of dues.As per the circular, banks were told to start the resolution
process as soon as a borrower defaulted on a term loan and were given 180 days to cure it, failing which the account would have to be
It also said that any company that defaulted on its loan repayment obligation even by a day should be declared a defaulter.Further, under
the new norms, lenders can decide on the resolution if 66 per cent of the lenders agree to take this recourse
This is similar to the adoption of a resolution under IBC where 66 per cent of votes is required.The revised circular on NPAs is unlikely to
include the pre-IBC restructuring tools like Strategic Debt Restructuring (SDR), Corporate Debt Restructuring (CDR), Sustainable Structuring
of Stressed Assets or S4A.In the previous circular the RBI had withdrawn all existing debt restructuring schemes -- S4A, CDR, JLF, and SDR
-- and asked banks to draw resolution plans for all assets where the banking sector's exposure was more than Rs 2,000 crore.On Tuesday,
RBI Governor Shaktikanta Das said that the recent Supreme Court ruling did not take away the powers of the central bank, nor would it impact
the major default cases undergoing insolvency proceedings."We will soon get the revised circular
There will not be any undue delay in that," Das said.On whether the recent instances of the RBI being taken to the court have impacted its
actions, Das said: "It's always the democratic right of any person, individual or corporate entity to challenge the decision of any
authority in the court of law
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