Banks must mark ILFS ACs as NPAs after default RBI

 

Banks must mark ILFS ACs as NPAs after default RBI

first_imgNew Delhi: The RBI Tuesday told the National Company Law Appellate Tribunal that banks will have to classify the accounts of debt-ridden IL&FS and its group companies as NPAs in terms of its master circular and the Supreme Court judgement. It is the obligations of the banks to mark any loan as NPA after a default of 90 days, and they cannot be relieved from doing that, said the Reserve Bank of India, adding that it is a process which every bank has to follow. Senior advocate Gopal Jain, representing the RBI, submitted before the National Company Law Appellate Tribunal that true reflection in the books of the banks is important for fair accounting because it has early warning signals. "The whole thing is to have a transparent and fair accounting system, so that the health of the institution is not affected. "And whatever process, you are having for resolution in IL&FS, we are not on recovery and the resolution process, we are only saying banks has to record the position of NPA in terms of the master circular and the supreme court judgement, which recognises NPAs in the circular," Jain said. According to him, the job of the regulator is to have right policy for all the banks. He further said that banks are finalising their accounts and need clarification from the NCLAT on this. "There is obligations for the banks that after 90 days it has to show (as NPA) in their account," said Jain, adding "banks can not be relieved of their obligations for bad loans from their account book". The National Company Law Appellate Tribunal -bench headed by Chairman Justice S J Mukhopadhaya said it would hear the RBI on next date of hearing, which is on April 29. The RBI has moved the National Company Law Appellate Tribunal seeking modification of its order that restrained banks from declaring accounts of IL&FS and its group companies as NPAs. According to the apex bank, there was an overlap of power.last_img

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