Skip to main content

No supporting documents for insolvency circular: RBI tells HC

Image
By

The Reserve Bank of India (RBI) on Friday told the Gujarat High Court (HC) that there was no supporting document to its June 13 press release, directing banks to initiate insolvency proceedings against 12 non-performing assets (NPAs), including Essar Steel.
The submission was made during the hearing of Essar Steel’s petition, filed on July 4, against insolvency proceedings initiated against it at the National Company Law Tribunal (NCLT) by the State Bank of India (SBI)-led 22 banks’ consortium as well as the Standard Chartered Bank (SCB).
The single-judge Bench of Gujarat HC has reserved its judgment for Monday. On Thursday, it had asked the RBI to present any documents other than the press release that supported its June 13 circular. The RBI counsel on Friday told the court that the press release was issued after a high-level committee meeting of the RBI decided to issue the directive.
Essar Steel, in its petition, has challenged the RBI’s directive as “arbitrary” and an impediment to its recovery process amid debt restructuring talks with banks.
Both the RBI and SBI counsels on Thursday had argued that Essar Steel had suppressed facts that it was taken by surprise by the RBI’s June 13 press release by not mentioning the same in its original petition. The SBI counsel submitted minutes of the June 22 joint lenders’ forum (JLF) meeting to support their arguments.
However, the Essar Steel counsel maintained that the company had not suppressed facts since its petition was directed at RBI’s directive and not against NCLT proceedings. The counsel countered the respondents’ arguments that Section 238 of Insolvency Bankruptcy Code (IBC), 2016, overrode other laws on insolvency and liquidation by maintaining that the RBI circular was subject to IBC 2016 and violated the company’s fundamental rights.
Essar Steel’s counsel also argued that in the June 13 and June 17 JLF meeting, the core committee had deliberated on Essar Steel’s debt restructuring proposal and sought clarification on over 25 points before finalising the proposal, which proved that the lenders had not considered insolvency as an option.
The Business Standard, New Delhi, 15th July 2017

Comments

Post a Comment

Popular posts from this blog

Shrinking footprints of foreign banks in India

By
Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…
Post a Comment
Read more

RBI rushes in to prop up falling rupee

By
RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…
Post a Comment
Read more

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

By
GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…
1 comment
Read more