The Finance Ministry wants public sector banks to monitor all Insolvency and Bankruptcy Code (IBC) cases very closely and review, particularly, the top 20 accounts as part of their bad assets management. The direction came during a meeting between Financial Services Secretary Vivek Joshi and the MDs and CEOs of PSBs to deliberate on the status of resolution of accounts under the provisions of IBC.
The Ministry has also suggested hiring of more experienced counsels in order to improve efficiency in IBC processes, including simplifications of applications filed by banks. The meeting was also attended by Secretary, Ministry of Corporate Affairs Manoj Govil, Chairman of IBBI Ravi Mitall, senior officials of the DFS and Ministry of Corporate Affairs.
During the meeting status of ongoing insolvency cases filed by banks in respect of large accounts was comprehensively discussed and regular monitoring by bank’s management of high value cases were also deliberated. The banks suggested that record of default pr3ovided by the National E-Governance Services Limited (NeSL) be considered as sufficient ground for ascertaining the existence of a default, which will help in expeditious admission of insolvency applications.
The Banks also flagged the requirement for having a working collaboration amongst their respective legal teams, NeSL and the Insolvency and Bankruptcy Board of India for swift, efficient and time-bound resolution. The Secretary, Financial Services also chaired a meeting to discuss the working of the National Asset Reconstruction Company Limited (NARCL), attended by banking heads, Chairmen of NARCL and Chairman of India Debt Resolution Company Ltd (IDRCL).
During the course of the meeting, NARCL and banks flagged challenges faced by them, a key one being that lenders are required to set up system and processes to efficiently assign potential debt to NARCL. The NARCL is registered with RBI as an asset reconstruction company and was incorporated in 2021 with a majority stake held by PSBs and the balance by private banks and with Canara Bank as the sponsor bank.
Its mandate is resolution of bad loans worth about Rs 2 lakh crore in the banking system. There was also deliberation on processes that could lead to minimising the time taken for acquisition process. Another issue discussed was that pertaining to inter-se creditors arising due to differential security structures, additional collaterals, exclusive securities which lead to longer time frame.
Joshi also presided over a workshop on ‘customer service’ attended by bank MDs/ EDs wherein PSBs were advised to take initiatives across multiple pillars like institutionalised customer service measurement (process efficiency, channel mix, complaint management, etc.), developing a customer centric mindset across entire organisation, adopting technology for improving customer service (embedding technology in product and customer processes) and setting service delivery standards.