FinMin asks banks to closely monitor NCLT, NARCL cases to reduce delays

The Finance Ministry on Thursday asked banks to closely monitor cases in NARCL and NCLT to minimise procedural delays and adjournments so that bad loan resolution matters are expedited.

An integrated portal is being developed by the Ministry of Corporate Affairs for seamless information flow to banks on the National Company Law Tribunal (NCLT) cases, the finance ministry said in a statement.

The decision was taken in a review meeting chaired by Department of Financial Services Secretary M Nagaraju to address key operational challenges and enhance the efficiency of resolution mechanisms through the National Asset Reconstruction Company Limited (NARCL) and NCLT.

The discussion on cases at NARCL centred on expediting timelines for the resolution of accounts.

The Secretary underscored NARCL's pivotal role as a specialised entity designed to accelerate the resolution of large-value stressed assets, thereby, strengthening the financial ecosystem, it said.

During the meeting, it was informed that NARCL has acquired 22 accounts with an exposure of Rs 95,711 crore, demonstrating its effectiveness in driving resolutions.

Additionally, 28 accounts with an exposure of Rs 1.28 lakh crore were resolved by banks, subsequent to the NARCL making the offers, reflecting the indirect impact of NARCL's presence in settling/successfully pursuing recovery through other resolution mechanisms, the statement added.

Banks were advised to strengthen their synergies with NARCL to ensure efficient and timely resolutions, it noted.

Further, it said, a committee under SBI would examine and submit a fresh list of accounts for transfer to bolster the resolution pipeline and align the process with its intended objectives.

The review of cases pending for admission before the NCLT benches focused on addressing delays in admitting Corporate Insolvency Resolution Process (CIRP) applications and overcoming procedural inefficiencies impacting resolution timelines, the statement said.

A detailed review of the top 20 accounts pending for admission at the NCLT, examining their current status and outlining necessary actions to expedite proceedings was taken up, it added.

Banks were advised to ensure active monitoring of the top 20 cases of banks at the Managing Director level, with all proceedings to be attended by senior officials, not below the rank of General Manager.

Further, banks were urged to minimise procedural delays and strongly oppose unnecessary adjournments.

On the lack of real-time information sharing with Financial Creditors (FCs) about applications filed by Operational Creditors (OCs), which often caused coordination challenges, representatives from the MCA informed about the proposed plan already in place to develop an integrated portal to keep banks informed about all proceedings, further enhancing transparency and coordination in the resolution process, the statement said.

Both meetings reaffirmed the government's commitment to strengthen the recovery framework through coordinated efforts by all stakeholders, ensuring a more robust and efficient resolution process, it added.