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Banks can't declare accounts of debt-ridden IL&FS as NPA without NCLAT nod

The tribunal's direction came during the hearing over the government's plan for the resolution of IL&FS group companies

Press Trust of India  |  New Delhi 

IL&FS, Infrastructure Leasing and Financial Services, Mumbai

No bank or financial institution can declare the of debt-ridden and its group as non-performing assets (NPAs) without NCLAT's permission, the appellate tribunal said on Monday.

A two-member (NCLAT) bench, headed by Chairman Justice S J Mukhopadhaya, said that this is done in the interest of debt resolution plan.

"No or its subsidiaries' account to be declared by any financial institution without approval from NCLAT," the appellate tribunal said.

The tribunal's direction came during the hearing over the government's plan for the resolution of IL&FS group

During the last hearing on February 11, had allowed 22 of IL&FS group, which were classified in the green category based on their financial health, to service their debt obligations.

Besides, it had also approved the appointment of former judge Justice D K Jain to supervise the resolution process of crisis-hit IL&FS and its group companies.

The appellate tribunal also lifted the moratorium and allowed 133 IL&FS firms incorporated outside India to continue with the resolution process.

IL&FS group companies are classified into three groups -- Green, Amber and Red -- based on their respective financial positions.

The companies falling under green category will continue to meet their payment obligation. While the companies which can not meet their obligations but can meet only operational payment obligations to senior secured financial creditors are classified as amber.

The red category includes those entities which cannot meet their payment obligations towards even senior secured financial creditors.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, February 25 2019. 12:40 IST
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