NCLAT Authorizes Banks to Reveal Defaulting IL&FS Accounts as NPAs

Highlights

1. The National Company Law Appellate Tribunal (NCLAT) on Thursday permitted the banks to reveal the accounts of IL&FS and its set of companies as non-performing assets
2. Currently, the IL&FS Group companies have a cumulative debt of over INR 90,000 crore
3. The RBI urged the NCLAT, filing an appeal to tweak the order allowing the banks to reveal the defaulting accounts of IL&FS as NPAs

The National Company Law Appellate Tribunal (NCLAT) on Thursday permitted the banks to reveal the accounts of IL&FS and its set of companies as non-performing assets (NPAs) regarding the defaulted payments. Chairman Justice SJ Mukhopadhaya elevated the ban on the banks to reveal the in-debt accounts of IL&FS and its group of 300 entities.

The NCLAT has made it clear that the banks shall go ahead and declare the IL&FS accounts as NPAs but simultaneously banks have been prohibited to begin any recovery process of debit money.

The NCLAT justice bench has noticed that lenders must not withdraw support unless a concrete solution is found to sort the issue of IL&FS and its group of companies.

Currently, the IL&FS Group companies have a cumulative debt of over INR 90,000 crore and are in the process of resolution.

Even Deloitte has come under the radar for alleged malpractice in IL&FS accounts.

In February, the NCLAT restricted banks from recognising any IL&FS Group accounts as non-performing assets without seeking permission of approval from the Law Appellate Tribunal.

The RBI urged the NCLAT, filing an appeal to tweak the order allowing the banks to reveal the defaulting accounts of IL&FS as NPAs as per the banking regulations.

Apparently, every company of IL&FS Group is being classified in order to meet payment obligations.

The companies that meets the end of all payment obligations are categorised as “Green” on the other hand companies that would be able to satisfy only operational payments and senior secured debt obligations are categorised as “Amber”. While the others are categorised as “Red”.

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Important Link:

1. IL&FS case: Govt likely to ban Deloitte for 5 yrs for alleged malpractice

Also Read:

1. Government likely to ban Deloitte for Alleged Malpractice in IL&FS Accounts