PSB Chiefs Tasked with Monitoring Top Insolvency Cases

In a bid to effectively manage bad assets, the Finance Ministry of India convened a meeting with managing directors and CEOs of public sector banks (PSBs) on Friday, December 22. During the meeting, Financial Services Secretary Vivek Joshi emphasized the importance of monitoring and reviewing all cases, particularly focusing on the top 20 Insolvency and Bankruptcy Code (IBC) cases.

Representative image

Review of Top IBC Cases

Joshi instructed PSBs to conduct monthly reviews of the top 20 IBC cases to expedite their resolution. He also highlighted the need to monitor cases that have been pending for admission and resolution under the IBC for an extended period.

Collaboration for Swift Resolution

Recognizing the significance of collaboration in achieving swift and efficient resolution, banks emphasized the requirement for effective coordination among their legal teams, the National E-Governance Services Limited (NeSL), and the Insolvency and Bankruptcy Board of India (IBBI). This collaboration aims to streamline processes and ensure time-bound resolution of cases.

Enhancing Customer Service

Earlier in the day, Joshi presided over a workshop focused on customer service. Several banks showcased their initiatives to improve customer service experiences. These initiatives included continuous monitoring of customer feedback through various channels and enhancing contact center experiences. The importance of adopting a customer-centric mindset across the entire organization, leveraging technology to improve customer service, and setting service delivery standards was emphasized.

Review of National Asset Reconstruction Company Limited (NARCL)

In a separate meeting, Joshi reviewed the functioning of NARCL, a government entity established in 2021 to address bad loans in the banking system. NARCL and participating banks highlighted challenges faced during the process. Discussions centered around setting up efficient systems and processes to assign potential debt to NARCL. Additionally, deliberations were held on minimizing the time taken for the acquisition process and addressing issues related to inter-se creditors arising from differential security structures.

Government Guarantee for NARCL

It is worth noting that NARCL is backed by a government guarantee worth Rs 30,600 crore for security receipts issued by the company. As per the arrangement, NARCL pays up to 15% of the agreed value for bad loans in cash, while the remaining 85% is covered by government-guaranteed security receipts.

The Finance Ministry's proactive approach in monitoring the management of bad assets, reviewing IBC cases, fostering collaboration for swift resolution, enhancing customer service, and overseeing the functioning of NARCL demonstrates the government's commitment to addressing challenges in the banking sector and ensuring financial stability.