Mumbai, April 23 (IANS) The Indian Banks Association (IBA) has submitted a memorandum to the Reserve Bank of India (RBI) on resolution of stressed assets.
The central bank is working on a revised circular for the Resolution of Stressed Assets after a Supreme Court's direction on April 2.
In its April 10 memorandum, the IBA recommended and pitched for:
a. Threshold of 90 per cent by value for approval of Resolution Plan by lenders against industry demand of aligning with IBC threshold of 66 per cent.
b. A period of 240 days for preparation, approval and implementation of Resolution Plan against industry demand of at least of 360 days.
- Power and Infra projects involve large lending consortia involving number of banks and financial institutions.
- Probability of achieving approval of RP significantly lower with higher threshold of 90 per cent
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Will lead to large number of stressed assets getting referred to NCLT under IBC, eroding value for the stakeholders
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Power and Infrastructure sectors are heavily regulated
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Government counter-parties unable to provide even contractually permissible relief pending regulatory dispensations
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Regulatory resolutions are inordinately delayed for 1-3 years
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Industry is demanding realistic approval threshold and period for preparation, approval and Implementation of Resolution plan
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