SBI-led committee to be set up to formulate new list of large stressed accounts with banks for resolution under IBC

The government has decided to set up a committee under the State Bank of India chairman to examine and submit a fresh list of stressed accounts with banks for transfer to NCLT and bolster the resolution pipeline

This would be in addition to the top 20 accounts identified by banks earlier for admission at the NCLT.

The decision on examination of fresh large stressed account was taken during a review meeting chaired by secretary, department of financial services (DFS) M. Nagaraju with CEOs of public sector banks (PSBs) and other agencies.

During the meeting, Nagaraju also asked heads of PSBs to regularly monitor and review the top 20 Insolvency and Bankruptcy Code cases with banks as part of their bad assets management.

The DFS secretary asked banks to review their top 20 cases at the managing director level, with all proceedings to be attended by senior officials not below the rank of general manager.

A detailed review of the top 20 accounts pending for admission at the NCLT, examining their status and outlining necessary actions to expedite proceedings was also taken up. Further, banks were urged to minimise procedural delays and strongly oppose unnecessary adjournments.

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Commitment to efficiency 

The meeting was organised to address key operational challenges and enhance the efficiency of resolution mechanisms of bad assets through the National Asset Reconstruction Co. Ltd (NARCL) and the National Company Law Tribunal (NCLT).

Apart from bank CEOs, the meetings were also attended by senior officials of DFS, the Insolvency and Bankruptcy Board of India (IBBI), the Ministry of Corporate Affairs (MCA), NARCL, India Debt Resolution Co. Ltd (IDRCL).

The discussion on cases at NARCL centered on expediting timelines for resolution of accounts. Nagaraju underscored NARCL’s pivotal role as a specialised entity designed to accelerate the resolution of large-value stressed assets, thereby strengthening the financial ecosystem.

During the meeting, it was informed that NARCL has acquired 22 accounts with an exposure of ₹95,711 crore, demonstrating its effectiveness in driving resolutions. Additionally, 28 accounts with an exposure of ₹1.28 trillion were resolved by banks, after NARCL making the offers, reflecting the indirect impact of NARCL’s presence in settling/successfully pursuing recovery through other resolution mechanisms.

Banks were advised to strengthen their synergies with NARCL to ensure efficient and timely resolutions. A committee under the SBI chairman, would be set up to examine and submit a fresh list of accounts for transfer to bolster the resolution pipeline and align the process with its intended objectives.

The review of cases pending for admission before the NCLT benches focused on addressing delays in admitting Corporate Insolvency Resolution Process (CIRP) applications and overcoming procedural inefficiencies impacting resolution timelines.

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On the lack of real-time information sharing with Financial Creditors (FCs) about applications filed by Operational Creditors (OCs), which often caused coordination challenges, representatives from the MCA informed about the proposed plan already in place to develop an integrated portal to keep banks informed about all proceedings, further enhancing transparency and coordination in the resolution process.

The meetings reaffirmed the government’s commitment to strengthen the recovery framework through coordinated efforts by all stakeholders, ensuring a more robust and efficient resolution process.