Letter to BS: Wilmer cannot take RBI to court over Shree Renuka

This refers to “Wilmar set to take RBI to court over Shree Renuka” (March 27). The February 12, 2018, Reserve Bank of India (RBI) circular clearly outlines the requirements for a non-performing asset (NPA) account to be upgraded as a standard account. One of the ways is change of ownership. Wilmar was reportedly a 38.57 per cent owner of Shree Renuka Sugars when the latter defaulted on the loans given by banks and was classified as an NPA account. 
 

In the sections applicable to restructuring of advances under the aforesaid circular, it is clearly mentioned that a NPA account cannot be upgraded by change of ownership if the acquirer is disqualified under Section 29A of the Insolvency and Bankruptcy Code (IBC) 2016. As Wilmar was a party to the default by virtue of holding 38.57 per cent of the equity of Shree Renuka Sugars, it stands disqualified as an acquirer under the IBC. Hence it cannot ask for upgrade of the account by virtue of change of ownership as it was already a substantive owner when the account of Shree Renuka Sugars became an NPA and hence disqualified. This norm has been upheld even in the NCLT. Hence holding the RBI responsible for its problem is not correct.
 

Arun Pasricha, New Delhi

Letters can be mailed, faxed or e-mailed to: 
 

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg 

New Delhi 110 002 

Fax: (011) 23720201  ·  E-mail: letters@bsmail.in

All letters must have a postal address and telephone number