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RBI Stern Warning on NPA for SCBs

In its fight against Non-Performing Assets (NPAs) RBI has warned that it would direct the banks to go for an insolvency resolution mechanism under Insolvency and Bankruptcy Code (IBC) if the banks did not sort out 55 high value cases in six months. 

• RBI had already identifies 12 NPAs for insolvency with each accounting to over Rs. 5000 crores. These 12 account for 25% of the NPAs of the banks.

• RBI wants the banks to expedite the resolution of these NPAs as soon as possible

• It is mulling to direct the banks to file insolvency proceedings in cases where a NPA resolution plan is not chalked out within six months.

NPA Burden
• The Indian banking sector is facing NPAs problemworth over Rs. 8 lakh crore. Of which PSBs(public sector banks) hold Rs. 6 lakh crore.

IBC


• Under IBC the time-frame for the resolution is 180 days.
• The process is triggered by filing a case with National Company Law Tribunal.
• NCLT can admit or reject the case within a period of 14days.
• Once the case is accepted the lender would get 30 days to hire insolvency practitioners and then the entire process to be completed in 180 days that will consider various possibilities, including whether to revive the project or liquidate it.

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