Bankers see no material impact on thier provisioning as RBI
As the Reserve Bank deadline to resolve around 70 large accounts worth over Rs 3.8 trillion ended today, and no word coming in from the regulator on an extension, State Bank chairman Rajnish Kumar said the deadline will not have any material impact on provisioning as banks are already in the process of resolving these accounts.
As per the February 12 circular issued by the RBI, banks were to resolve stressed accounts within 180 days beginning from March 1, 2018, failing which banks will have to refer these accounts, which have an exposure of Rs 2,000 crore or above to the NCLTs for bankruptcy process.
The deadline for beginning bankruptcy process ended today and the RBI has so far not come on record saying it will stick to the original direction.
"The August 27 deadline does not have any material impact on the provisioning requirements as most of them have already been classified as bad loans," Kumar told reporters on the sidelines of the annual general meeting of the Indian Banks Association this evening.
Kumar said there would be only ageing provisioning for those accounts which will go to the NCLT.
"There is not going to be any accelerated provisions for these accounts since the February 12 circular doesn't mention it," he said, adding banks will have one year more to spread the provisioning for these accounts.
According to rating agency Icra, 70 large accounts mainly from power, EPC and telecom with a total exposure of Rs 3.8 trillion would require resolution by September 1, as per the February 12 circular.
Kumar said of the 34 stressed power accounts, with a combined value of Rs 1.74 trillion, 16 have already been referred to the NCLT and seven are in the final stages of resolution, Kumar said refusing to name of them.
It can be noted that affected power producers have challenged the RBI direction in the Allahabad High Court, saying their businesses are in trouble due to external reasons like lack of fuel supplies, and not due to mismanagement, and the matter is still pending with the court.
The RBI attempt at getting the Supreme Court vacate the high court stay did not materialise instead the apex court asked the HC to hear the matter regularly.
"These distressed power accounts are being finalised now with individual banks approving it and even if some of them go to NCLT, we'll be able to withdraw it by 90 per cent majority," Kumar added.
Union Bank managing director and chief executive Rajkiran Rai said as to how many accounts will go the NCLT will be discussed later as banks have 15 days more time to decide on referring them to NCLT.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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