MONITORING NCLT AND NARCL: ECONOMY

MONITORING NCLT AND NARCL: ECONOMY

NEWS: FinMin asks banks to closely monitor cases in NCLT, NARCL to minimise procedural delays

WHAT’S IN THE NEWS?

The Finance Ministry has directed banks to closely monitor NCLT and NARCL cases to ensure faster resolution of stressed assets. NARCL, India’s first bad bank established in 2021, tackles large-value NPAs, while NCLT handles corporate disputes and insolvency cases.

Finance Ministry Directives:

  1. Monitoring NCLT and NARCL Cases:
    • Banks must track cases involving the National Company Law Tribunal (NCLT) and National Asset Reconstruction Company Limited (NARCL).
    • Objective: Reduce delays and ensure faster resolution of stressed assets.
  1. Integrated Portal:
    • Developed by the Ministry of Corporate Affairs for sharing NCLT case updates with banks.
    • Aim: Improve efficiency in case monitoring.

Bad Bank and NARCL:

  1. Definition: A bad bank buys non-performing assets (NPAs) to clean up banks' balance sheets and manage bad loans.
  2. NARCL (2021): India’s first bad bank, proposed in the 2016 Economic Survey.
    • Objective: Resolve large-value bad loans (> ₹500 crore).
    • Structure:
      • NARCL: Aggregates and purchases NPAs.
      • IDRCL: Resolves bad loans under NARCL.
    • Funding:
      • 15% in cash and 85% as government-backed security receipts.

·         Ownership: State-owned banks (51%) and private banks (49%).

National Company Law Tribunal (NCLT):

  1. Role: Quasi-judicial body for corporate civil disputes, insolvency, and company winding-up cases.
  2. Established: June 1, 2016, under the Companies Act, 2013.
  3. Recommendation: Based on the Balakrishna Eradi Committee's reforms.

Source : https://economictimes.indiatimes.com/industry/banking/finance/banking/finmin-asks-banks-to-closely-monitor-cases-in-nclt-narcl-to-minimise-procedural-delays/articleshow/116260827.cms?from=mdr