Insolvency process: Banks to seek RBI clarity on SC's status quo order

In February, RBI, through a circular, subsumed all internal debt resolution mechanisms that were available to banks, and directed them to recognise NPA and corporate defaults in a uniform manner

Bankers will approach the Reserve Bank of India (RBI) to seek clarity on whether they can proceed with insolvency proceedings against stressed corporate debtors. This follows the Supreme Court's (SC) directive to lenders to maintain the status quo on the implementation of the RBI's February 12 circular, which mandated insolvency proceedings for a debt servicing default beyond 180 days.

The apex court had also transferred all writ petitions filed by stressed corporates in various high courts against the RBI’s circular to itself, and will hear the case on November 14.

Punj Lloyd, the Association of Power Producers, South Indian Sugar