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12 defaulters identified by RBI to be named soon: FinMin

Thursday, June 15, 2017

The Finance Ministry yesterday said names of the 12 big defaulters identified by the RBI for initiation of bankruptcy proceedings will soon be made public. The RBI yesterday said it has identified 12 large loan defaulters who account for 25% of the total NPAs in the banking sector and those will be referred to respective banks for filing insolvency proceedings. These cases will be accorded priority by the National Company Law Tribunal (NCLT).

The Finance Ministry further said that NCLT was being strengthened to fast track bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC). "You have got 12 cases that have been identified, the names will be shortly announced, and they account for as much as 25% of the bad assets," Finance Ministry's Principal Economic Advisor Sanjeev Sanyal said.

Each of the defaulters identified by RBI owes over Rs 5,000 crore to banks. The banking sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSBs). Sanyal told news channel CNBC TV18 that if a bankruptcy process has been set in motion, it does not mean that "we are just going to take all of this tomorrow morning and sell it off and auction it off".

The IBC provides for 180 days for completion of insolvency process which can be extended by another 90 days in special cases. Economic Affairs Secretary Tapan Ray said most of the regulations of IBC are in place since December and the required infrastructure is ready to handle cases.

Central Bank of India under RBI’s corrective action lens
Public sector Central Bank of India has been placed under the RBI's watchlist on Prompt Corrective Action (PCA) owing to high bad loans and negative return on assets. IDBI Bank, Indian Overseas Bank, UCO Bank and Dena Bank have already come under the PCA initiated by the Reserve Bank, which is a noose-tightening on fresh loan disbursal as well as dividend distribution.

"Reserve Bank of India, vide its letter dated June 13, 2017, has put the bank under Prompt Corrective Action in view of high NPA (non-performing assets) and negative return on assets (RoA)," Central Bank of India said in a regulatory filing yesterday. The bank further said: "We believe that corrective measures arising out of the PCA will help in improving overall performance of the bank."

For the fiscal ended March 2017, the bank has reported a net loss of Rs 2,439 crore, against a loss of Rs 1,418 crore in 2015-16. Net non-performing assets (NPAs) also jumped to 10.20% of net advances for the fiscal from 7.36% year ago. The return on assets were at (-)0.80%.

PCA is a framework devised by RBI that monitors key areas like capital, asset quality and profitability of banks.

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