NEW DELHI: The Finance Ministry on Thursday directed banks to step up monitoring of cases involving the National Asset Reconstruction Company Ltd (NARCL) and the National Company Law Tribunal (NCLT) to reduce delays and accelerate bad loan resolutions.
This follows similar concerns recently raised by a senior Reserve Bank of India official, who highlighted inefficiencies in the insolvency resolution framework and the need for stricter adherence to timelines.
In a review meeting chaired by Department of Financial Services (DFS) Secretary M. Nagaraju, the focus was on addressing operational bottlenecks and enhancing the efficiency of resolution mechanisms.
Integrated portal
The ministry urged banks to actively monitor cases to minimise procedural delays, curb unnecessary adjournments, and ensure senior-level participation to expedite the resolution process.
To streamline information flow and enhance transparency, the Ministry of Corporate Affairs (MCA) is developing an integrated portal that will provide banks with real-time updates on NCLT cases. This initiative aims to address coordination challenges, particularly between Financial Creditors (FCs) and Operational Creditors (OCs), which have often led to delays in the resolution process.
NARCL’s progress
During the meeting, it was noted that NARCL has acquired 22 accounts with a total exposure of Rs95,711 crore, reflecting its critical role in resolving large-value stressed assets.
The Finance Ministry emphasised NARCL’s indirect impact, citing that 28 additional accounts with an exposure of Rs1.28 lakh crore were resolved by banks following NARCL’s offers.
To further strengthen the resolution pipeline, a committee led by State Bank of India (SBI) will submit a fresh list of accounts for transfer to NARCL. Banks were advised to deepen synergies with the asset reconstruction company to ensure swift and efficient resolutions.
NCLT cases under review
The meeting also reviewed pending Corporate Insolvency Resolution Process (CIRP) applications before NCLT benches. A detailed analysis of the top 20 cases was conducted, with banks instructed to ensure active monitoring of these cases at the Managing Director level.
Senior officials, at least at the rank of General Manager, are to oversee proceedings to prevent delays caused by procedural inefficiencies. Banks were specifically urged to oppose unnecessary adjournments, which have been a recurring issue.
The proposed integrated portal is expected to improve coordination among stakeholders, further reducing delays in the insolvency process. The meetings reaffirmed the government’s commitment to bolstering the recovery framework through enhanced collaboration and transparent mechanisms.
By addressing procedural inefficiencies and reinforcing accountability, the Finance Ministry aims to strengthen India’s financial ecosystem and ensure a more robust bad loan resolution process.
