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'NCLT, insolvency infra won't suffice to handle RBI's move to curb NPAs'

Experts say NCLT might not be able to adhere to time frame of 14 days to admit these cases

Veena Mani  |  New Delhi 

NCLT, insolvency infra won't suffice to handle RBI's move to curb bad loans

The Reserve Bank of India's (RBI's) decision to ask to file for in the case of 12 major (NPAs) has put a question mark over the capacity of the (NCLT).

In the entire process of insolvency, the tribunal is the key stakeholder. It decides whether a case if fit for admission under the and of 2016.

professionals say the infrastructure won't suffice to handle the pressure that will emerge due to RBI's move. Mamta Binani, an professional, says more benches of are required and some of the single-member ones should become double-member. There are 11 benches, including those in the four largest cities. After admission, companies have 180 days for resolution, extendable to 270 days if the regulator deems fit.

NCLT's orders can be appealed at the National Company Law Appellate Tribunal.

Some professionals say might not be able to adhere to the time frame of 14 days to admit these cases. At present, most cases have been admitted within the stipulated time. Then, there is the capacity issue with professionals themselves. Once the matter is admitted by NCLT, the debtor entity is taken over by an interim resolution professional for one month, who functions as a promoter of the company. This interim resolution professional is replaced by a fulltime one after the first month. These professionals then advise a committee of creditors.

Binani adds, "This (RBI's move) will test the ability of professionals to handle big-ticket cases. This will reflect on how many quality professionals there are."

Almost 500 professionals have accredition granted by the and Bankruptcy Board of India (IBBI).

Nilesh Sharma, an professional with Dhir & Dhir Associates, says the government should set up a new bench that will hear cases referred by He agrees that the existing infrastructure and mechanism will not be able to take the load, as the amount at stake is huge. "Special focus is required and a special bench is advisable," he said.

So far, most cases have been filed by corporate debtors, to restructure their loans. Fearing the need for a partial write-off of their loans, did not file for any proceedings. Under the Code, either debtor or creditor may take the case to

On the bench

* professionals (IPs) demand special bench for high-profile cases

* IPs say will resist taking route as it would mean going for a haircut

* IPs fear the will not be able to dispose of cases within 14 days if current arrangement remains

* Need more double-benches to tackle high-profile cases

* ordinance will test the quality of IPs