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Banks have started work on debt resolution plans or are in the process of initiating insolvency proceedings against defaulters named in the central bank’s second list well in advance of the 13 December deadline set by the regulator, three senior bankers said.
In June, the Reserve Bank of India (RBI) sent its first list of 12 defaulters to their creditors for the quick launch of resolution proceedings at the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). The borrowers had bad loans totaling Rs2 trillion.
Many accounts in RBI’s second list are already in the process of debt resolution and most lenders have set aside adequate money to cover the risk of default, indicating that efforts to resolve the bad-loan pile will gather pace. Banks, mainly public sector lenders, are weighed down by stressed assets amounting to Rs10 trillion.
“Aggregate sector-level provisioning should be adequate, but bank-wise there may be some deficit. But it is not expected to be large... even if the account goes to NCLT,” the chief executive of a state-run bank said on condition of anonymity.
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