Under the new RBI rules, banks will have to file for insolvency proceedings against loan defaulters with ________ crore or more if a resolution plan is not implemented within 180 days of the initial occurrence of the default.
Rs 2,000
RBI Rules for Insolvency Against Loan Defaulters
The Reserve Bank of India (RBI) introduced new guidelines to address stressed assets in the banking system. These rules mandate banks to initiate insolvency proceedings against large loan defaulters if a resolution plan is not successfully implemented within a specified timeframe.
According to these new RBI rules, banks are required to file for insolvency proceedings with the National Company Law Tribunal (NCLT) against loan accounts that have a default amount of a certain threshold or more. This action is triggered if a resolution plan for the stressed asset is not finalized and put into effect within 180 days from the date the default first occurred.
The specific threshold amount for the loan default that triggers this mandatory insolvency filing is Rs 2,000 crore or more.
This measure was put in place to ensure timely resolution of large stressed assets and reduce the accumulation of bad loans in the banking sector. It aims to push banks and borrowers towards quicker resolution or face mandatory insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.
In summary, under the new RBI rules, banks must proceed with insolvency filings for loan defaults of Rs 2,000 crore or more if resolution is not achieved within 180 days.
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