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Don't undermine the IBC

Deadlines should not be extended arbitrarily

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Insolvency And Bankruptcy Code Ibc

Business Standard Editorial Comment 



Many lenders and several companies, which figure in the Reserve Bank of India’s (RBI) second list for the resolution of non-performing assets (NPAs) are reportedly lobbying with the central bank for more time even as the deadline of December 13 nears. If debt resolution is not finalised by then, the 28 firms in the list will end up in the National Company Law Tribunal (NCLT) for the next step in the insolvency process. At that point, banks will have to provide for losses up to 50 per cent of the loan value, hitting their earnings. This, in turn, will adversely affect their profitability, which is already under stress as more and more NPAs have been formally recognised over the past few years. Apart from the fear of higher NPA provisioning, there are several other reasons – sometimes even contradictory – that have been put forward by the bankers as well as the firms, which face initiation of the insolvency process.

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First Published: Mon, December 11 2017. 22:45 IST

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