RBI's February 12 circular may send 100 more companies to NCLT, says report

A large number of stressed companies are set to be referred to the National Company Law Tribunal (NCLT) with the Reserve Bank of India (RBI) making it mandatory for banks to have a 100 percent voting for any debt restricting plans, reported Business Standard.

“It's not only the power companies which are facing the brunt of RBI move, but many other companies from telecom and allied industries are also facing the bankruptcy action. In many cases, a bank with less than one per cent vote at the committee meetings had stopped the debt resolution plans and the rest of the banks have no other option but to follow suit and refer the company to the NCLT,” a banker said as reported by Business Standard.

The Supreme Court will hear a case filled by the power producers’ association against RBI's February 12 circular on November 13, the report said, adding that any decision by the apex court will not only impact these stressed power companies, but also the ones that are associated with them as SC has bunched all the petitions together for a single hearing.

Life Insurance Company (LIC), Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) and public sector banks are not giving consent for any debt restructuring programmes which may led to about 80-100 companies being referred to the NCLT, the report said.