RBI to decide on required action after SC order: Jaitley

TIL Desk/Business/New Delhi/ Within hours of the Supreme Court voiding the RBI’s timebound debt resolution circular of last February, a cautious government said on Tuesday that, on the nullifying of this directive, the central bank would have to decide on what is required to be done for recovery of banks’ bad loans. “RBI will now decide with the present condition of the market as to what’s to be done in the absence of the February 12 circular”, Finance Minister Arun Jaitly said in response to a query at a BJP press conference.

Finance Ministry officials earlier declined to comment on the order and its implications for the banks and their non-performing assets (NPAs or bad loans), the alternate loan resolution mechanisms, and the fate of those cases which have been referred to the National Company Law Tribunal (NCLT) by banks under directions from the RBI, but which have not yet been admitted.

Earlier on Tuesday, the Supreme Court quashed the Reserve Bank of India (RBI) circular February 12, 2018, on company insolvency, which mandated that lenders have to provide a resolution plan for large stressed accounts of Rs 2,000 crore and above within 180 days of default. Under the directive, 12 cases, including those of ELectrosteel, Monnet Ispat and Essar Steel, accounting for 25 per cent of the total quantum of NPAs, were referred to the NCLT.