Twelve NPA accounts identified by IAC of RBI

After promulgation of Banking Regulation (Amendment) Ordinance, 2017 authorizing RBI to direct banking companies  resolve  stressed assets, RBI constituted Internal Advisory Committee (IAC) and held its 1st meeting on 12th June 2017 and took up for consideration accounts which were classified partly or wholly as NPA amongst the top 500 accounts. The Reserve Bank of India (RBI) is moving to resolve the bad loan crisis with an Internal Advisory Committee (IAC) of the RBI having identified 12 accounts of corporate borrowers who owe over Rs 5,000 crore each — and overall involve an amount of close to Rs 175,000 crore — for insolvency proceedings under the newly enacted Insolvency and Bankruptcy Code 2016 (IBC).

Accordingly the IAC noted 12 accounts totaling to 25% of the current gross NPA of the banking system which qualify for immediate reference under Insolvency & Bankruptcy Code, 2016 (IBC). Out of these 12 accounts, the names of 6 accounts are in news till date.  The same are as under: Bhusan Steel ( 43500 Cr ), Bhusan Power and Steel ( 37400 Cr ), Essar Steel ( 32000 Cr ), Alok Industries ( 22075 Cr ), Monet Ispat (12115 Cr )

Out of the above Alok Industries is a textile company whereas the rest are steel manufacturing company.  Bankers have been given 15 days time to initiate bankruptcy proceedings against these 6 entities. The adjudicating Authority under IBC will take 270 days after which these companies will go into liquidation.  The steel plants have almost no value and there may not be adequate other security for recovery of the loans. As a result, in the liquidation process, substantial amount of advances may not be recovered. Government, as usual, have to pump in huge money to banking system to enable them to overcome the loss. This is how the banking companies are utilized to drain out public money to a few people.  

The public are attuned to the attitude of the bureaucrats and political people that they never listen to public voice; that they hardly  take punitive measures for lapses by higher authorities; that they jointly and severally promote corruption.  While amendment to BR Act, IBC are expected to recover as much as possible and name and shame the concerned borrowers, there is no hope of fixing accountability on the sanctioning and monitoring  authorities of Banks  and RBI who caused such bad debts.