The Reserve Bank of India says it has identified 12 accounts each having over Rs 5,000 crore in outstanding loans for immediate referral for resolution under the insolvency and bankruptcy code (IBC).
These identified loans account for 25 per cent of total bad loans of banks, the central bank said late on Tuesday.
The RBI had set up an internal advisory committee, which had arrived at an objective, non-discretionary criterion for referring accounts for resolution under the IBC.
"The internal advisory committee recommended for IBC reference of all accounts with fund and non-fund based outstanding amount greater than Rs 5,000 crore, with 60 per cent or more classified as non-performing by banks as of March 31, 2016," RBI said.
These identified 12 accounts, which account for 25 percent of the banking sector's gross NPAs, will qualify for immediate reference under the insolvency and bankruptcy code.
RBI will be issuing directions to banks to file for insolvency proceedings under the IBC in respect of the identified accounts. These cases will be given priority by the National Company Law Tribunal.
India's banking sector is struggling with Rs 8 lakh crore in bad loans, of which Rs 6 lakh crore are with state-owned banks.
Finance Minister Arun Jaitley met heads of public sector banks on Monday and later told reporters that the RBI was at an advanced stage of preparing a list of borrowers where NPA resolution was required under the insolvency law.
Apart from the 12 accounts, other NPA accounts, which don't qualify under the criteria, the internal advisory committee recommended that banks will have to finalise 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," RBI said.
