NEW DELHI: The Reserve Bank of India’s Governor Shakthikanta Das is consulting the finance ministry on a revised circular notifying guidelines for the recognition of stressed assets by banks. According to North Block sources, the RBI has been in touch with them on the issue and the two would formulate the guidelines in consultation as advised by the apex court. Earlier this year, the Supreme Court had struck down the circular issued by the RBI on February 12, 2018, which had made it mandatory for banks to initiate insolvency proceedings against companies with non-performing asset levels of Rs 2,000 crores or above.
“The RBI has been in talks with us on the issue and may also brief the new finance minister on it. The consultations are ongoing,” a senior official from the Finance Ministry told TNIE. According to the official, while many clauses from the earlier February 12 are likely to be retained by the RBI, there are certain points on which it might change its stance.
Another official from the ministry also pointed out that the final circular cannot come before the amendment in the bankruptcy law. As reported by TNIE earlier, the Insolvency law panel is likely to meet on June 12 to discuss amendments recommended in the Insolvency and Bankruptcy law (IBC) ahead of the budget session.
“This is not just about timelines. Many small technical issues need to be addressed. With many wilful defaults and fraud cases still under the IBC, more clarity is required on how they would be dealt with by Resolution Professionals and creditors. It will require amendments to the IBC law to avoid any future discrepancies,” the official said, adding that the RBI will come up with a final revised circular only after that.