{"id":124354,"date":"2019-06-24T10:10:20","date_gmt":"2019-06-24T10:10:20","guid":{"rendered":"https:\/\/www.bnreport.com\/banks-have-to-decide-on-fate-of-150-borrowers-by-july-7\/"},"modified":"2019-06-24T10:10:20","modified_gmt":"2019-06-24T10:10:20","slug":"banks-have-to-decide-on-fate-of-150-borrowers-by-july-7","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/banks-have-to-decide-on-fate-of-150-borrowers-by-july-7\/","title":{"rendered":"Banks have to decide on fate of 150 borrowers by July 7"},"content":{"rendered":"

Mumbai<\/strong>: Banks have just about a couple of weeks to decide the fate of more than 150 borrowers, which include sugarmaker Bajaj Hindusthan, energy companies RattanIndia Power and Suzlon<\/a> and other infrastructure<\/a> and road builders as the 30-day review period for these loans ends on July 7.<\/p>\n

The new framework for resolution of stressed assets issued on June 7 requires banks, financial institutions, non-banking finance<\/a> companies (NBFCs) and asset reconstruction companies (ARCs) to decide on a resolution plan and sign an inter creditor agreement (ICA) after a 30-day review period.<\/p>\n

Alternatively, lenders can decide to take these accounts to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC).<\/p>\n

It is estimated that banks have to decide on the way forward for distressed debt of at least \u20b93 lakh crore, assuming an average loan outstanding of \u20b92,000 crore for these 150-odd companies.<\/p>\n

\u201cAll lead banks have started joint lenders meetings to decide the course of action on these accounts and assess whether there is scope for restructuring. Banks will have to take a decision on many of these accounts, especially those not yet admitted to NCLT,\u201d said a senior executive in charge of recoveries at a public-sector bank. \u201cThe provisioning burden does not kick in right away but banks will have to make additional provisions if they cannot solve the issue in the next 180 days.\u201d<\/p>\n

The central bank circular says that if a resolution plan is not implemented within 180 days from the end of the 30-day period, banks have to make an additional 20 per cent provision. Another 15 per cent provision has to be made if a plan is not implemented within a year. These provisions are in addition to the provisions already held or made as per the asset classification. Past experience on lenderinitiated restructuring plans has been disappointing.<\/p>\n

\u201cAlmost all the 590 restructured accounts in the corporate debt restructuring (CDR-II) failed. The list of accounts covered by June 7 circular of 150 or more accounts is not a new list, and many of them were part of earlier reviews,\u201d said Harish Chander, a resolution consultant.<\/p>\n

\u201cWith great effort, lenders were able to cover 3-4 accounts under successfuRead More \u2013 Source<\/strong><\/a>
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ET Markets<\/a><\/h5>\n

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