Insolvency and Bankruptcy Code (IBC) and the Government’s emphasis on resolution provide opportunity for asset reconstruction companies as stressed assets still have inherent value, Finance Minister Arun Jaitley said. During discussions with Asset Reconstruction Companies (ARCs) and Private Equity firms (PE) on Saturday, he said these NPAs were essentially productive assets which, if turned around, would not only create additional jobs but also contribute to national output.
For this to happen, timely interventions, transparent price discovery and right management were required, he said. The internal advisory committee (IAC) of the RBI, after its meeting on June 13, had recommended 12 accounts totalling about 25 per cent of the gross NPAs of the banking system for immediate reference under IBC. These accounts have an exposure of more than Rs 5,000 crore each, with 60 per cent or more classified as bad loans by banks as of March 2016. The 12 accounts alone constitute a quarter of over Rs 8 lakh crore of NPAs. Of the total, Rs 6 lakh crore are with public sector banks.