RBI vide press release dated July 18, 2017 has constituted an Internal Advisory Committee (“IAC”), which arrived at an objective, non-discretionary criterion for referring accounts for resolution under Insolvency and Bankruptcy Code, 2016 (“IBC”). In particular, the IAC has recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than Rs.5000 Cr., with 60% or more classified as non-performing by banks as of March 31, 2016.
Accordingly, Reserve Bank of India has issued directions to certain banks for referring accounts qualifying under the aforesaid criteria, to initiate insolvency process under the Insolvency and Bankruptcy Code, 2016. As regards the other non-performing accounts which do not qualify under the above criteria, the IAC recommended that banks should finalize a resolution plan within six months. In cases where a viable resolution plan is not agreed upon within six months, banks should be required to file for insolvency proceedings under the IBC.
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