The Reserve Bank of India has found out second batch of large borrowers and soon will ask lenders to refer these large accounts to National Company Law Tribunal for insolvency proceeding, a report on IANS said.
The central bank hopes banks will be able to resolve some more NPAs by year-end. "The Reserve Bank has now advised banks to resolve some of the other accounts by December 2017; if banks fail to put in place a viable resolution plan within the timelines, these cases also will be referred for resolution under the IBC," RBI deputy governor Viral Acharya told IANS.
Under the Insolvency and Bankruptcy Code, 2016, banks can refer large non-performing assets to NCLT to either find a middle way out or to liquidate the borrower company for recovering loan money. In July, the central bank had made public a list of 12 borrowers that account for 25 per cent of total non-performing assets India's banking sector stares at. Insolvency proceeding against most of these borrowers has already been started.
India's banking sector is ailing with both public and private sector banks having had to clear huge amount of debt, though private banks have slightly lower NPAs. As per an estimate, banks have to wipe out bad loan worth Rs 8-11 lakh crore, a colossal amount of money.