Comments
To avoid delays in decision-making, the Insolvency and Bankruptcy Board of India (IBBI) has asked banks to ensure that their representatives on the Committee of Creditors (CoC), which is established under the Insolvency & Bankruptcy Code (IBC) for resolution of stressed assets, are executives fairly high up in the hierarchy so that they can take on-the-spot decisions.
IBBI’s communication to banks in this regard comes in the backdrop of the Adjudicating Authorities (National Company Law Tribunals) expressing concern in a few cases where members of the CoC are not empowered enough to take quick decisions, thereby delaying resolution/ settlement of stressed assets.
“We have issued a circular based on the concerns expressed by the Adjudicating Authority in about half-a-dozen cases. The concern is that they (creditor representatives) do not come to meetings; if they come, they are not prepared and they cannot take decisions on the spot.
“In one case, the NCLT issued a showcause notice to the CoC. So, we are urging the CoC to be a little more responsible,” said MS Sahoo, Chairperson, IBBI.
Speedy resolution
Underscoring that the spirit behind the code is speedy and timely resolution, S Ravi, a practising chartered accountant and banking expert, said: “The CoC meeting should be attended by the empowered senior management so that decisions are taken spontaneously. Delegation within banks must be such that large cases must be represented by senior management.”
Bankers, however, stressed that most of the crucial decisions regarding large credit, resolution/ settlement of stressed assets and write-offs, are taken by a committee.
Hence, an individual officer, even if he/she is high up in the hierarchy in the CoC necessarily will have to consult the top management before giving assent/ rejecting resolution/settlement of stressed asset cases.
Suitable policy needed
In view of the IBBI circular, a senior public sector bank official said banks will evolve a suitable policy to ensure that their representatives on CoC are not found wanting when it comes to taking decisions.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.