RBI’s 12th February’s circular has been hit down by the Supreme Court. Because of this, the central bank of India will be coming up with an amended circular shortly to restructure all stressed assets.
The Supreme Court’s order has not withdrawn any power from RBI. Still powers were endowed with the regulators. Only they needed to be utilized in a specific way. RBI will be issuing one amended circular without any delay.
The powers that are bestowed by the Parliament will be used and resolution will be given fast. On 2nd April, a 2-judge Bench of the SC that included Justice Rohinton Nariman as well as Justice Vineet Saran announced that the circular of February 12 as the law’s radical views. The government has not been consulted by the banking regulator before the circular was issued. It has dragged many companies to the IBC.
Under this rigid circular provided by the Reserve Bank of India, banks need to acknowledge even a single day defaults as well as start work with an aim of resolving it within 189 days in case of a stressed account. If there is any failure to improvise a plan within 180 days, the account of INR 2000 crore and more should be sent to the bankruptcy court.
34 power companies that are in debt of over INR 2.2 trillion to the banks will get benefited because they will never be pulled to NCLT currently at one go. They can try negotiating restructuring of debt with particular banks.
The Reserve Bank of India is standing dedicated for maintaining and enhancing the resolving momentum of the stressed assets along with sticking to the credit discipline. Section 35AA of the revised Banking Resolution Act has been confirmed by the Supreme Court. But according to the law, the Reserve Bank of India need to exert its power in regards of certain defaults by certain debtors.