Confusion over resolution remains after SC sets aside RBI circular: Experts

Legal experts pointed out that only one aspect of the RBI's framework - to send all ailing companies to IBC - has been turned down

After the Supreme Court (SC) quashed the RBI’s February 12 circular, there is lack of clarity on whether banks could 

resort to alternative stressed asset resolution mechanisms, such as Strategic Debt Restructuring, Flexible Structuring of Existing Long Term Project Loans, Scheme for Sustainable Structuring of Stressed Assets, etc.

The February 12 circular had withdrawn the use of these other mechanisms to resolve stressed asset cases, making Insolvency and Bankruptcy Code (IBC) the only available option. Now, the alternative resolution options come back to the table, said experts.

“There is need for clarity on this issue either from the RBI