New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Thursday allowed banks to declare as non-performing assets (NPA) the accounts of IL&FS and its group companies that have defaulted on payments.
A bench headed by Chairman Justice SJ Mukhopadhaya lifted the embargo on the banks to declare the accounts of the debt-ridden infrastructure company and its 300 group entities. However, the appellate tribunal has also clarified that although the banks would declare the IL&FS accounts as NPAs, they cannot initiate a recovery process and debit the money.
The NCLAT had in February prohibited banks from recognising any accounts of IL&FS and its group entities as NPAs without first seeking approval from the tribunal.
The bench, however, observed that lenders must not withdraw support until a resolution is found of the IL&FS and its group companies. On the other hand, the RBI had moved the NCLAT, filing a plea to modify the order allowing the banks to declare the defaulting accounts of IL&FS as NPAs, as per the banking regulations.
At present, the IL&FS and its group companies have a collective debt of over Rs 90,000 crore and the infrastructure giant is going through the resolution process. Now, all group companies of IL&FS are being classified according to their ability to meet payment obligations.
Those companies, which are able to meet all payment obligations, are categorised as ‘green’, while companies able to meet only operational payments and senior secured debt obligations are categorised as ‘amber’ and others are categorised as ‘red’.
