The Reserve Bank of India (RBI) formally turned down requests from banks to extend the deadline for restructuring the debt of companies on a second list of bad loan accounts that it had issued in August. This will mean bankruptcy proceedings likely kicking off at the National Company Law Tribunal (NCLT) by December 31 for companies such as Videocon Industries, Jaiprakash Associates, Uttam Galva Steel, Essar Projects, Jaiswal Neco and Asian Colour Coated.
The central bank also declined to relax any of its other stipulations, including the process related to restructuring outside the bankruptcy court, in its letter to lenders on December 27’s evening. RBI said those accounts that were not recast as per rules stipulated in August will have to enter the insolvency process, said two senior bank officials who did not want to be named.
“We reiterate that all the conditions specified should be met… We regret that request for any extension of time or any case specific dispensation cannot be granted,” RBI said in its letter, which EThas seen.
RBI had said in August that lenders to the 28 defaulting companies had until December 13 to find a resolution plan in accordance with a formula prescribed by it. If the banks failed to do so, the companies had to be referred to the NCLT.
Resolution plans were drawn up for some of the companies on the list by the deadline. These include Soma Enterprises under the Scheme for Sustainable Structuring of Stressed Assets (S4A) and a one-time settlement in the case of Anrak Aluminium.