RBI mandates 50% provisioning for NCLT cases
Mumbai: The Reserve Bank of India (RBI) has directed banks to set aside 50% cover in the form of provisions for the cases referred for insolvency proceedings at the National Company Law Tribunal (NCLT), according to an Economic Times report.
This comes at a time when the central bank has sent the second list of defaulters, asking bankers to come up with a resolution plan by 31 December. In case, there is no resolution in the given time, banks will have to take these borrowers to NCLT.
The list has names of at least 26 borrowers, Mint reported on Wednesday.
Earlier on 13 June, the RBI had directed banks to take 12 large companies, representing a quarter of the banking system’s gross bad loans, to NCLT for proceeding under Insolvency & Bankruptcy Code (IBC). Except for Era Infra Engineering, 11 cases have been admitted.
In these 12 cases, the RBI had sent a letter to banks asking them to set aside 50% provisions for secure exposure, and 100% in case of unsecured exposure.
Bankers, however, said RBI has not clarified on provisioning for other cases referred to NCLT.
State Bank of India chairman Arundhati Bhattacharya had said in an earnings call on 11 August that the RBI has not come with any clarification for cases other than the dozen identified.
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