(LiveMint)
With the deadline set up by Reserve Bank of India (RBI) for resolution of stressed assets worth around ₹ 3.8 trillion coming to an end today, all eyes are on the expected Allahabad high court judgement on a clutch of petitions against the central bank’s 12 February circular.
RBI, in its 12 February circular, tightened norms for settling bad debt by setting timelines for resolving non-performing assets (NPAs). It allowed lenders to initiate insolvency proceedings against defaulting corporates. Although banks were given several options to arrive at a resolution plan, they had 180 days to do so. The central bank also introduced the concept of a one-day default under which banks have to identify incipient stress even when repayments are overdue by a day.
The Allahabad High Court had earlier ordered lenders to avoid acting against power producers after they sought relief against RBI’s new stress resolution norms. Also, in a relief to power producers, the Supreme Court had refused to stop Allahabad High Court from hearing these petitions.
