Finance Ministry Urges Banks to Monitor NCLT and NARCL Cases for Efficient Bad Loan Resolutions

The Finance Ministry has urged banks to closely oversee cases in the National Asset Reconstruction Company Limited (NARCL) and the National Company Law Tribunal (NCLT) to reduce procedural delays and adjournments, aiming to speed up bad loan resolutions. An integrated portal is being developed by the Ministry of Corporate Affairs to facilitate seamless information flow to banks regarding NCLT cases, according to a statement from the finance ministry.

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A review meeting, led by Department of Financial Services Secretary M Nagaraju, focused on addressing operational challenges and improving resolution mechanisms through NARCL and NCLT. The discussion highlighted the need to expedite timelines for resolving accounts at NARCL. The Secretary emphasised NARCL's crucial role as a specialised entity aimed at accelerating the resolution of large-value stressed assets, thereby enhancing the financial ecosystem.

Enhancing Resolution Efficiency

NARCL has acquired 22 accounts with an exposure of Rs 95,711 crore, showcasing its effectiveness in driving resolutions. Additionally, banks resolved 28 accounts with an exposure of Rs 1.28 lakh crore after NARCL made offers, reflecting its indirect impact in settling or successfully pursuing recovery through other mechanisms. Banks were advised to strengthen their collaboration with NARCL for efficient and timely resolutions.

A committee under the State Bank of India (SBI) will examine and submit a fresh list of accounts for transfer to enhance the resolution pipeline and align the process with its intended objectives. The review of cases pending for admission before NCLT benches focused on addressing delays in admitting Corporate Insolvency Resolution Process (CIRP) applications and overcoming procedural inefficiencies affecting resolution timelines.

Addressing Procedural Delays

A detailed review of the top 20 accounts pending for admission at NCLT was conducted, examining their current status and outlining necessary actions to expedite proceedings. Banks were advised to ensure active monitoring of these top 20 cases at the Managing Director level, with all proceedings attended by senior officials not below the rank of General Manager. Additionally, banks were urged to minimise procedural delays and strongly oppose unnecessary adjournments.

Representatives from the Ministry of Corporate Affairs informed about a proposed plan already in place to develop an integrated portal for real-time information sharing with Financial Creditors (FCs) about applications filed by Operational Creditors (OCs). This aims to address coordination challenges caused by a lack of real-time information sharing, further enhancing transparency and coordination in the resolution process.

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