State Bank of India (SBI) chairman Arundhati Bhattacharya on Tuesday said banks may not rush to resolve cases or recover dues via the Insolvency and Bankruptcy Code (IBC). Bhattacharya explained the ecosystem required for the new law had not been fully created yet which was why cases before the National Law Company Tribunal (NCLT) were moving slowly. “First the NCLT bench has to be created and people have to be deputed to it.
Next you need to create an information utility which will tell the court what is the amount due to a particular client and what are the securities available, This will create one time information for the court so that it does not have to move from case to case in order to determine what is the indebtedness,” she explained.
Bhattacharya said it was necessary to have a judicial framework for orderly resolutions of assets. “We cannot have makeshift structures that we were had earlier. So, we have been asking for a bankruptcy law and that has come,” she said.
Bhattacharya said the resolution professionals needed to pass an examination and be registered with the NCLT. “It has taken a little time for the law to be passed, rules to be notified and the infrastructure to be created” she said adding the ecosystem was in the process of being created.
Talking to reporters, Bhattacharya said the quantum of provisioning needed for the twelve 12 stressed accounts, identified by the Reserve Bank of India (RBI), was ‘slightly’ more than the amount the bank would have made given these were npa accounts. “It will obviously hit the bottom line, but not to that extent. It will be bearable and nothing that will make a big difference.
Last month, the central bank identified 12 large accounts (with exposure of more than Rs 5,000 crore and more than 60% of which is recognised as NPAs) which banks have to refer to the IBC. After this, lenders sought clarification from RBI on provisions to be made for accounts being sent to the National Company Law Tribunal (NCLT).
The SBI chairman said all the 12 stressed accounts were receiving its attention and it hoped to see fast resolution for the settlement of dues through the IBC. “All of the stressed accounts are receiving our attention. As and when it will come up in front of the NCLT, we will be making our representations. And we hope that these resolutions will happen as fast as it currently laid out in the law,” she added.