NCLT benches must be in proportion to firms in region: SBI

The National Company Law Tribunal (NCLT) adjudicating on insolvency cases requires superior infrastructure that allows NCLT benches to be set up in proportion to the state-wise number of companies active in the region, state-run State Bank of India said on Monday.

While the Central government has set up 11 benches of the NCLT, there are currently about 11 lakh active companies, according to the latest SBI Ecowrap report authored by Chief Economist Soumya Kanti Ghosh.

Of the 11 NCLT benches, two are in Delhi including the principal bench, and one each at

Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai.

"We suggest that the number of NCLT benches be set up in proportion to state wise

active companies operating in the region," said SBI, some of whose large non-performing assets (NPAs), or bad loans, have already been referred to the NCLT.

The NCLT has been set up under the new Insolvency and Bankruptcy Code (IBC) for speedier resolution of NPAs in the Indian banking system, which have crossed the staggering level of Rs 9 lakh crore.

"Areas with high concentration of active companies, namely, Mumbai, Delhi, Kolkata etc. require commensurate bench strength for efficient disposal of cases," Ghosh said.

"The need is more acute since it is now easier even for operational creditors to drag a

defaulter to NCLT. Currently, 9,073 cases are under consideration in NCLT, of which 2,511 relate to insolvency."

Besides, leveraging technology is essential for NCLT for efficient discharge of its role and the success of IBC, the report said.

"The platform should be digitalized for online submission of applications and uploading of

documents for which a strong back office can be established at a centralized place for providing better bandwidth at bench level," according to Ecowrap.

Together augmenting NCLT infrastructure, the report also sugested that instead of the current fee of Rs 25,000 for filing cases, creditors could be charged a minimal fee of 0.1 per cent on the resolution amount, which "could imply significant monetary resources, taking care of infrastructure funding requirement for NCLT and making it self sufficient".

--IANS

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