The National Company Law Tribunal, Mumbai Bench (Hon’ble NCLT) in application filed by Mr. R. Subramaniakumar, Administrator of Dewan Housing Finance Corporation Limited (Administrator) against the Committee of Creditors, through Union Bank of India & Ors. in the matter Reserve Bank of India (RBI) versus Dewan Housing Finance Corporation Limited (DHFL) (IA.NO.449/MB/C-II/2021 in CP(IB)No.

GUIDE TO RESTRUCTURING, TURNAROUND AND INSOLVENCY IN ASIA PACIFIC OCTOBER 2018

In continuation of Reserve Bank of India’s (RBI) efforts to ease financial stress caused by the Covid-19 pandemic, the RBI issued the circular on the Resolution Framework for Covid-19 Related Stress dated 6 August 2020 (August 6 Circular). The August 6 Circular creates a limited time window for certain categories of borrowers affected by Covid-19 pandemic related business disruption to be allowed resolution plans in the nature of restructuring while permitting the borrower accounts to retain their status as ‘standard’.

Indian Banking sector is going through a hard time due to various reasons including but not limited to increase in Gross Non-Performing Assets (GNPA), loan frauds/corruption in some cases, economic slowdown etc. Rise in NPAs is major concern for banks as it reduces profit of banks and restricts the loan giving ability of the banks by way of provisioning. Reasons for the rise in NPA can be attributed to aggressive lending practice by the banks and willful default by borrowers i.e., lack of willingness to repay.

The Covid-19 pandemic is having an overwhelming impact on global order. These are testing times for nations. For India and for most other countries, the outbreak presents twin challenges, not only containing the virus spread, but also limiting the economic impact in an already slowing economy.

The Reserve Bank of India (RBI) issued a revised prudential framework for resolution of stressed assets on 7 June 2019 (Revised Circular) in supersession of the erstwhile circular on Resolution of Stressed Assets dated 12 February 2018 (Feb 12 Circular) which was struck down by the Hon’ble Supreme Court on 2 April 2019.

Revision of ECB framework: The Reserve Bank of India (RBI) on December 17, 2018 revised and consolidated the provisions related to borrowing and lending transactions into one single regulation i.e. the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 ("ECB Regulations").       

Supreme Court has declared the RBI Circular dated 12-02-2018, by which the RBI promulgated a revised framework for resolution of stressed assets, ultra vires Section 35AA of the Banking Regulation Act. It declared all actions proceeded against debtors, triggered under Section 7 of the Insolvency Code, as a result of the said circular as non-est.

The Court however held that the Banking Regulation (Amendment) Act, 2017, which inserted Section 35AA, i.e., provisions which give the RBI certain regulatory powers, is not manifestly arbitrary.

Virtual Currency: State of pandemonium continues

MUMBAI          SILICON VALLEY          BANGALORE          SINGAPORE          MUMBAI BKC          NEW DELHI           MUNICH           NEW YORK

Deal Destination 

Market for Stressed Assets: Truly

‘Stressed’ or Disguised ‘Desserts’ Spelt

Backwards?

August 2018

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