Banks may refer 23 of 28 large NPAs in RBI’s second list to NCLT

With the Reserve Bank of India's (RBI's) 13 December deadline for initiating insolvency proceedings against the second list of errant borrowers gets over today, NPA-laden public sector banks are expected to refer as many as 23 of the 28 large stressed accounts for insolvency proceedings.

RBI had, in August, asked banks to either resolve 28 more large stressed accounts by 13 December or refer them to the National Company Law Tribunal (NCLT) by 31 December.

Except for Anrak Aluminium, Jayaswal Neco Industries, Soma Enterprises, Jaiprakash Associates and Videocon Industries, whose accounts are in the process of being reevaluated for possible recast, the remaining 23 of the 28 accounts, which together account for 40 per cent of the system wide bad loans or worth around Rs4,00,000 crore, are expected to be brought before the NCLT.

In the case of Anrak Aluminium, the lenders are looking for a one-time settlement and for Soma Enterprises the banker is closer to resolution while for Jaiprakash Associates the lenders are seeking RBI approval for a "deep restructuring", reports quoting sources said.

Lenders have also reported to have sought RBI permission to extend the 13 December deadline for Videocon Industries, where they have huge exposure.

Some of the large accounts which are likely to go to the NCLT include Asian Color Coated Ispat, Castex Technologies, Coastal Projects, East Coast Energy, IVRCL, Orchid Pharma, SEL Manufacturing, Uttam Galva Metallic, Uttam Galva Steel, Visa Steel, Essar Projects, Jai Balaji Industries, Monnet Power, Nagarjuna Oil Refinery, Ruchi Soya Industries and Wind World India.

Lenders had the restructuring option under the S4A, SDR or 5/25 schemes till 13 December.

Many bankers have failed to resolve cases within the stipulated period and have asked for extension on the 13 December deadline. However, they don't expect the RBI to oblige. Banks will have to refer them to the NCLT in the next 18 days that is by 31 December.

Banks will also have to make a provision of 50 per cent on these accounts by March 2018.