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Speeding up NPA resolution process by RBI with identifying 12 NPL accounts under the new bankruptcy code is a positive step for banks.
Banks, instead of just ageing NPAs on their books, will evaluate for a time-bound resolution, failing which there will be a forced liquidation which is also faster under the new Insolvency and Bankruptcy Code (IBC).
The Reserve Bank of India’s (RBI) appointed committee on Tuesday has identified large accounts for reference of NPAs under the Insolvency and Bankruptcy Code. Of the pool of 500 NPAs as of March 2016, it has identified 12 accounts (each with fund and non-fund exposure of more than Rs 5,000 crore each) and these accounts comprise around 25 percent of the system’s existing NPAs as per the RBI.
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