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By Banking Bureau

Indian Banks led by the State Bank of India have initiated insolvency proceedings against top defaulters of bank loans. The top defaulters include companies such as Bhushan Steel, Essar Steel, and Electrosteel Steels. They will be referred to the National Company Law Tribunal (NCLT) for recovery under the Insolvency and Bankruptcy Code (IBC).

Bhushan Steel tops the list of defaulted loan with Rs 44,478 crore outstanding to banks, Essar Steel owes Rs 37,284 crore and Electrosteel Steels at Rs 10,273.6 crore. Other names include Amtek Auto, Alok Industries, Monnet Ispat, Era Infra, Jaypee Infratech, ABG Shipyard, Jyoti Structures and Lanco Infra.

The central bank, RBI, has identified 12 most stressed accounts that constitute a quarter of the over Rs 8 lakh crore of Non Performing Assets.

“The meeting on these three companies was to finalize the application which banks will be filing to NCLT,” said a senior banker.

In the bankers meeting, lenders want members in the consortium to give their assent before registering the case with NCLT. On Lanco Infratech, the RBI directed its lead banker IDBI Bank to initiate the insolvency procedures.

A company when s referred to NCLT has to resolve loan issue in an 180-day time frame, to which 90 more days can be added if required. In case a viable plan fails to work out, then the company will face liquidation.

The banking system’s total NPAs stand at over Rs 8 lakh crore, of which 6 lakh crore owes to public sector banks. The 12 stressed accounts constitute 25 per cent of the gross NPAs of the banking system. Meanwhile, the Reserve Bank expanded a panel with three more members to vet the process of resolving mounting bad loans.

The panel is headed by former chief vigilance commissioner Pradeep Kumar.

Self-Regulation Sought

Meanwhile, banks are pushing for an internal check to stop the abuse of loans and diversions. The new proposal seeks a mandatory nod from the bank which supplied the loan for opening a current account in another bank.