In a recent directive, the Finance Ministry has instructed the heads of public sector banks (PSBs) to intensify their oversight and evaluation of Insolvency and Bankruptcy Code (IBC) cases, particularly focusing on the top 20 cases. The government has also emphasised the need for a monthly review of these cases for swift resolution during a meeting with managing directors and CEOs of PSBs.
The directive also includes a call to monitor long-pending cases for admission and resolution under the IBC. Banks have highlighted the importance of collaborative efforts among legal teams of banks, the National E-Governance Services Limited (NeSL), and the Insolvency and Bankruptcy Board of India to facilitate efficient and time-bound resolutions.
Additionally, a workshop on ‘customer service’ was held, where banks presented initiatives to enhance customer service experiences. The workshop emphasised the need for PSBs to adopt measures such as institutionalised customer service measurement, a customer-centric organisational mindset, technology integration, and setting service delivery standards.
Focus on NARCL
Financial Services Secretary Vivek Joshi conducted a review of the National Asset Reconstruction Company Limited (NARCL). The discussions covered challenges faced by NARCL and banks, focusing on the efficient assignment of potential debt to NARCL. The meeting deliberated on processes to minimise the time taken for the acquisition process and addressed issues related to inter-se creditors arising from differential security structures.
The government’s efforts to address bad loans included the creation of NARCL in 2021, with a majority stake held by Public Sector Banks. Canara Bank sponsors NARCL, which is registered as an Asset Reconstruction Company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The Cabinet, in 2021, approved a government guarantee of Rs 30,600 crore to security receipts issued by NARCL.
Finance Minister Nirmala Sitharaman had announced the government’s intention to set up a bad bank in her Budget 2021-22 speech, aiming to resolve bad loans worth around Rs 2 lakh crore in the banking system. The ongoing efforts reflect the government’s commitment to streamline and resolve issues within the IBC framework.
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