NCLAT allows banks to declare defaulting IL&FS, group companies as NPAs

NCLAT had in February restraining banks from classifying either IL&FS or its group companies as an NPAs

The National Company Law Appellate Tribunal (NCLAT) on Thursday allowed banks to declare accounts of Infrastructure Leasing & Financial Services (IL&FS) and its 300 group companies non-performing asset (NPA) if they had defaulted on payments. The appellate tribunal, however, said the lenders would not be able to initiate the recovery process against these accounts or debit money from them. The lenders, the NCLAT observed, must not withdraw their support from IL&FS until a final resolution for the company and its subsidiaries was found.

The order came on a plea moved by the Reserve Bank of India (RBI), which had said that