The Reserve Bank of India has warned banks to address big NPAs or face procedures under the new Insolvency and Bankruptcy Code on these accounts. In a communique to banks, the RBI urged settlement of 55 high value NPA accounts within six months.
Earlier, the RBI’s Internal Advisory Committee (IAC) has identified 12 big NPA accounts that need immediate action. These NPAs accounts for nearly 25% of total NPAs of the banking system.
The warning by the RBI comes after the government gave it the power to direct lenders to initiate the insolvency and resolution process in the event of default. According to experts, the RBI got power to initiate actions on NPA front as per the new Insolvency and Bankruptcy Code.
The RBI has a Committee comprised majorly of its independent Board Members to advise it in regard cases that may be considered as under the Insolvency and Bankruptcy Code, 2016 (IBC).
As a follow-up, RBI has constituted an Internal Advisory Committee (IAC) which held the first meeting on June 12, 2017. The IAC decided to focus on large stressed accounts in the beginning and identified top 500 NPA accounts.
