New Delhi, July 24 (KNN) On tackling stressed assets, banks had set-up a committee which has suggested a five-pronged approach for stressed assets resolution in the areas of SME resolution.

For this banks may put in place a Robust Monitoring Process), Bank-Led Resolution, AMC/AIF-led resolution, resolution through the Insolvency and Bankruptcy Code, and an asset trading platform, Shiv Pratap Shukla, Minister of State for Finance said in a 6written reply to a question in Rajya Sabha.

He said, Banks have initiated steps for taking forward the suggestions with due approvals.

He informed that the number of measures have been taken to streamline recovery and introduce innovative methods for recovery of NPAs.

The Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted to create a unified framework for resolving insolvency and bankruptcy matters, said the Minister.

Under this, by adopting a creditor-in-saddle approach, with the interim resolution professional taking over management of affairs of corporate debtor at the outset, the incentive to resort to abuse of the legal system has been taken away, coupled with debarment of willful defaulters and persons associated with NPA accounts from the resolution process, has effected a fundamental change in the creditor-debtor relationship, he stated.

He further informed that the Banking Regulation Act, 1949 has been amended, to provide for authorization to RBI to issue directions to banks to initiate the insolvency resolution process under IBC.

The Minister said, as per RBI’s directions, cases have been filed under IBC before the National Company Law Tribunal (NCLT) in respect of 39 large defaulters, amounting to about Rs. 2.69 lakh crore funded exposure (as of December 2017).

Besides, the  Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has been amended for faster recovery, with provision for three months imprisonment in case the borrower does not provide asset details and for the lender to get possession of mortgaged property within 30 days.

Also, 6 new Debts Recovery Tribunal have been established to expedite recovery, Minister informed the members.

In addition, Shukla said “under the PSB Reforms Agenda announced by the Government, PSBs have committed to clean and commercially prudent business through Stressed Asset Management Verticals for focused recovery, rigorous due diligence and appraisal for sanction by scrutinizing group balance sheets, at least 10% share in consortium lending, ring-fencing of cash flows, initiating use of technology and analytics for comprehensive due diligence across data sources, building capacity for techno-economic valuation, clean and effective post-sanction follow-up on large-value accounts by tying up with agencies for specialized monitoring, and strict segregation of pre and post-sanction roles for enhanced accountability.”