Page 9 - Banking Finance November 2017

BANK UPDATE

ICICI Bank financial assis- Insolvency code: Small creditors left out
The Insolvency and Bankruptcy Code may have prescribed a minimum vote of 75
tance to armed forces
percent in a creditors' committee before any decisions
ICICI Bank has committed a financial are taken in the insolvency process, but our country's
assistance courts are interpreting this quite differently. Two
of Rs.10 benches of the National Company Law Tribunal (NCLT)
crore to have interpreted the law to mean the biggest credi-
the Indian tor calls the shots. While this might hurt the interests
Armed
of the smaller creditors, the benches seem to be ar-
Forces. The guing that it will hasten the process of winding-up.
contribution, payable in two equal
tranches this year and next year, will In June this year, Raj Oil Mills approached the NCLT in Mumbai, asking to be
be utilised towards welfare activities declared insolvent. As part of this process, UVG Nayak was appointed as the
and betterment of the families of ex- interim resolution professional who was to look after the company's operations
servicemen who have lost their lives till such time that it was wound-up. As part of the procedure, a creditors' com-
guarding the nation, the bank said in mittee is set up which then takes a call on whether the interim resolution pro-
a statement. Chanda Kochhar, MD & fessional is to be retained as the Insolvency Resolution Professional (IRP); once
CEO, ICICI Bank, handed over a the IRP has come up with a plan, the creditors' committee votes on this as well,
cheque worth Rs. 5 crore to Defence and the same 75 per cent rule applies.
Minister Nirmala Sitharaman at a In this case, two of the financial creditors - Edelweiss ARC and IFCI Factors -
function in the Ministry. wanted Rajendra M Ganatra to be the IRP but they commanded only 61.84 per

National Institute of cent of the votes that were decided on the basis of the loans given by them.
Two meetings were held to resolve the issue, but it didn't help.
Bank Management plans
When the case went to NCLT's Mumbai bench, it ruled that the intent of the law
to train bankers to deal was to favour the financial creditor that had the largest stake even if it did not
with bad loans say so explicitly. "As a result, in our opinion", the bench ruled, "a viable solution
is to give the preference to the decision taken by the largest percentage in vot-
NIBM plans to conduct workshops on ing rights of the Financial Creditor(s)".
the new ecosystem
created by the gov- In a similar case, of Sree Metaliks Limited in the Kolkata bench, the voting share
ernment for resolv- was 62.27 per cent but the decision was to allow this vote to go through even if
ing ballooning it did not satisfy the 75 per cent rule.
NPAs. NIBM is also
going to conduct Central Government appoints executive directors in 9
programmes to help banks under the public sector banks
prompt corrective action (PCA) of the
RBI to come out of the PCA and im- Central government has approved the appointment of executive directors (EDs)
prove their financials, KL Dhingra, di- for 9 public sector banks. Bajrang Singh
rector, NIBM, said at the 48th Foun- Shekhawat has been appointed ED of Central
dation Day of NIBM. Bank of India,. Govind N. Dongre will be ED of
Punjab and Sind Bank. Ajay Kumar Srivastava
The increasing level of NPAs in the
and Matam Venkata Rao have been appointed
banking sector, more particularly of
EDs of Indian Overseas Bank and Canara Bank
the PSBs, is a cause of concern for respectively. Kul Bhushan Jain will be ED of
the Centre and it has come up with Andhra Bank. Rajesh Kumar Yaduvanshi and
the IBC 2016 and created the new
Chaitanya Gayatri Chinthapalli will be EDs of Dena Bank and Bank of India re-
"ecosystem for resolving the issue of spectively. Krishnan S. and Lingam Prabhakar have been appointed as EDs of
ballooning NPAs", Dhingra said.
Syndicate Bank and Punjab National Bank respectively.

BANKING FINANCE | NOVEMBER | 2017 | 9

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