RBI’s Second Defaulter List: Banks Start Work On NPA Accounts Well Ahead Of December Deadline

Banks have started working on debt resolution plans or are in the process of initiating insolvency proceedings against defaulters named in the Reserve Bank Of India’s (RBI) second list of 26 defaulters sent to commercial banks last week, Mint has reported, citing three senior bankers.

The RBI had in August identified 40 large defaulters as the next lot of firms where banks will push for early debt resolution. Along with the first list of 12 defaulters, these cases account for 60-65 per cent of the bad loans.

The process of debt resolution for many of these accounts is already underway and most lenders have reportedly set aside adequate funds to cover the risk of default. The banks have started the process well in advance of the 13 December deadline.

“Aggregate sector-level provisioning should be adequate, but bank-wise there may be some deficit. But it is not expected to be large... even if the account goes to NCLT,” the chief executive of a state-run bank was quoted by Mint on condition of anonymity.

These firms will not face bankruptcy proceedings immediately. Banks will be given time until 13 December to find a resolution, failing which they will have to initiate insolvency proceedings against those on the list.

Firms on the list include Videocon Telecom, JP Associates, Uttam Galva, Visa Steel, Monnet Power, Ruchi Soya, Orchid Chemical, IVRCL, Shakti Bhog, Nagarjuna Oil, Jai Balaji, Jayswal Neco, Soma Enterprises, Essar Projects, Unity Infra, Castex, East Coast Energy, SEL Manufacturing, Asian Colour Coated Ispat, Transstroy India, Ushdev International, Anrak Aluminium, BILT Graphic Paper Products Limited, Coastal Projects, GET Power Limited and Wind World (India) Limited.