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Business News » Companies News

Wilful defaulters in RBI's second list may face IBC proceedings

 Axis Bank, which was the first to come out and reveal its exposure in these defaulters, stated in Q2FY18 result that it has exposure on 12 of the identified defaulters.    

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Wilful defaulters in RBI's second list may face IBC proceedings
Representational Image: Photo: Pixabay

As the RBI deadline for the second list of defaulters ends on Wednesday, the banks might be looking to send about 23 accounts for insolvency and bankruptcy code (IBC) proceedings.

A total of 28 accounts were identified by the RBI as wilful defaulters of lenders who are facing heavy stressed assets in their balance sheet.
 
RBI had sent out a letter to lenders in August, asking them either resolve these 28 accounts through any of RBI's scheme before December 13, or else take the companies under IBC at the National Company Law Tribunal (NCLT) before December 31, 2017.


 
There are many options at RBI for stressed asset resolution like S4A (Scheme for Sustainable Structuring of Stressed Assets), SDR (Strategic Debt Restructuring) or 5/25 schemes.
 
A senior banker reportedly said on Tuesday that except for Anrak Aluminium, Jayaswal Neco Industries, Soma Enterprises and Jaiprakash Associates, all other accounts are going to the NCLT (for resolution).
 
He further explained that in case of Jaiprakash Associates, the lenders are seeking RBI approval for deep restructuring, while for Videocon under which the lenders have major exposure are seeking extension in deadline for decision.
 
Remaining all other companies will be given in hands of NCLT for resolution.
 
Some of these companies are listed and have seen selling pressure in their stock performance on Indian markets on Wednesday.
 
Share price of IVRCL closed at Rs 4.17 per piece on the BSE was down by 6.29%, while SEL Manufacturing plunged to nearly 3.86% after finishing at Rs 2.49 per piece.
 
Visa Steel and Jai Balaji Industries were also not far away as their stock prices ended at Rs 18.40 per piece and Rs 20.50 per piece down by 2.13% and 4.87% respectively.
 
Ruchi Soya Industries and Nagarjuna Oil Refinery closed in negative at Rs 18.80 per piece and Rs 3.90 per piece down by 1.83% and 1.52% respectively.
 
Viral Acharya, Deputy governor of Reserve Bank of India (RBI), said, “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."
 
"The higher regulatory minimum provisions should enable banks to focus on what the borrowing company requires to turnaround rather than on narrowly minimizing their own balance-sheet impacts. This should also help transition to higher, and more countercyclical, provisioning norms in due course," Acharya added.
 
Major banks like State Bank of India, ICICI Bank and Axis Bank have exposure in the second list of defaulters.
 
Axis Bank, which was the first to come out and reveal its exposure in these defaulters, stated in Q2FY18 result that it has exposure on 12 of the identified defaulters.
 
On June 13, 2017, as a part of NPA resolution, RBI through its Internal Advisory Committee (IAC) recognized 12 accounts under Insolvency & Bankruptcy code (IBC).
 

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TAGS:
BanksWilful defaultersbanks to refer 23 accounts for IBCInsolvency and Bankruptcy CodeNational Company Law TribunalNCLT resolutionbanks stressed assetsRBIRBI second list of defaultersdefaulters share pricebanks gross NPAbanks exposure in second list of defaultersViral AcharyaAcharya on defaultersEconomyMarketsBanking & Financial ServicesRBI first list of defaulters
Written By: ZeeBiz WebTeam
Updated: Wed, Dec 13, 2017
07:52 pm
Mumbai, ZeeBiz WebDesk
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