Banks Set To Refer 23 Of 28 Large Dud Accounts To NCLT Mumbai

With the RBI's deadline ending today to resolve the 28 large stressed accounts that the regulator had identified on its second list, banks are set to refer as many as 23 of them for insolvency proceedings.

In August, the Reserve Bank of India had asked banks to either resolve the 28 more large stressed accounts by today or refer them to the National Company Law Tribunal (NCLT) by Dec. 31. These 28 accounts together account for 40 percent of bad loans of around Rs 4 lakh crore.

“Except for Anrak Aluminium, Jayaswal Neco Industries, Soma Enterprises and Jaiprakash Associates, all other accounts are going to the NCLT (for resolution),” a senior banker told PTI.

Some of the large accounts which are likely to go to the NCLT include Asian Color Coated Ispat, Castex Technologies, Coastal Projects, East Coast Energy, IVRCL, Orchid Pharma, SEL Manufacturing, Uttam Galva Metallic, Uttam Galva Steels, Visa Steel, Essar Projects, Jai Balaji Industries, Monnet Power, Nagarjuna Oil Refinery, Ruchi Soya Industries and Wind World India.

In the case of Anrak Aluminium, the lenders are looking for a one-time settlement while for Soma Enterprises, the banker said the account is closer to resolution.

For Jaiprakash Associates – its EPC business arm – the lenders are seeking the Reserve Bank approval for a deep restructuring, another banker said.

The lenders have also sought RBI permission to extend the Dec. 13 deadline for Videocon Industries, where they have huge exposure, said another banker.

Also Read: Bankers Prepare To Send Nearly Rs 1.8 Lakh Crore In Loans To NCLT

“If the RBI gives us some extension for Videocon Industries, then it is fine. Otherwise, it will also have to go to the NCLT,” said the banker.

“For these accounts, there is hardly any traction for us to do it in another 10-15 days,” said a senior official from a state-owned bank.

The lenders have the restructuring option under S4A (Scheme for Sustainable Structuring of Stressed Assets), SDR (Strategic Debt Restructuring) or 5/25 schemes till today.

Many bankers said that though they asked for an extension on today's deadline, they don't expect the RBI to oblige.

Once these accounts pass the resolution deadline, banks will have to refer them to the NCLT in the next 18 days, that is Dec. 31.

Also Read: NCLT Approves Resolution Plan Approved By 66.67% Of Creditors In Value

Banks will also have to make a provision of 50 percent on these accounts by March 2018.

Of the 12 largest accounts that the RBI had named on the June list, 11 are under insolvency proceedings at the NCLT. These 12 accounts were worth a quarter of over Rs 10 lakh dud loans in the system.