Page 18 - Banking Finance May 2020
P. 18

LEGAL UPDATE





         LEGAL





                                                                               CASES
                                                                               CASES
                                                                               CASES
                                                                               CASES
                                                                               CASES







         Interpol notice against            Interpol's Files (CCF), an independent  ies. The suspension could be a huge
                                            body that ensures that all personal  setback for banks relying on IBC as an
         Nirav Modi's brother in            data processed through Interpol's  efficacious means of recovery sup-

         PNB fraud case                     channels conforms to the rules of the  ported by a legal skeleton and a sanc-
         The Interpol has placed the Red Cor-  organisation.                   tioned tribunal," she said.
         ner Notice against fugitive diamantaire
         Nirav Modi's brother Nehal in public Banks' FY2021 recovery to        Rating agency, Icra, expects the reso-
         view again, after he recently lost an  take a hit as new IBC cases    lution of corporate insolvency resolu-
         appeal against its issuance by the in-                                tion proceedings (CIRPs) would be im-
         ternational police cooperation body banned for a year                 pacted during FY21 due to a fall in the

         last year, on the request of Indian agen-  The suspension of fresh insolvency pro-  number of cases yielding a resolution
         cies, officials said.              ceedings and coronavirus-related dis-  plan. It also expects an increase in
                                            ruptions will impact recovery for lend-  haircuts for lenders.
         A Belgian citizen, Nehal Deepak Modi  ers in fiscal 2021 as resolution mecha-
                                                                               Icra said financial creditors could
         is wanted by the Central Bureau of  nisms outside the Insolvency and Bank-
         Investigation (CBI) in a case of alleged  ruptcy Code (IBC) are scarce, experts  realise about Rs. 60,000-70,000 crore
         fraud committed by his elder brother,  said.                          in FY21 through successful resolution
         Nirav, in the Punjab National Bank                                    plans from the IBC, as compared to
         (PNB), they added.                 Sonam Chandwani, managing partner,  about Rs. 1 trillion in FY20. The resolu-
                                            KS Legal and Associates, believes that  tion amount would also be lower as the
         Nehal Modi's name figured as the ac-  banks, primarily concerned over dete-  previous year witnessed large non-per-
         cused number 27 in the supplementary  riorating asset quality due to the  forming assets (NPAs) successfully be-
         charge sheet filed by the CBI, which  lockdown, have been crippled by the  ing resolved, it said.
         charged him for destroying evidence in  announcement of a blanket ban on the
         Dubai to cover the tracks of the al-  IBC for a year. The lack of effective  Concerned over deteriorating asset
         leged crime, the officials said.   recovery outside the IBC is a worri-  quality post covid-19, banks are now
                                            some issue for banks looking for reso-  hamstrung with regard to resolution
         An RCN is a request to law-enforce-  lution under a legal framework, said  and recovery. While the impact of the
         ment agencies worldwide to locate  Chandwani.                         lockdown is expected to lead to a pile
         and provisionally arrest a person pend-                               of bad assets, the lack of effective re-
         ing extradition, surrender or similar  “The freezing of IBC for a year closes  covery mechanisms outside the Insol-
         legal action.Nehal Modi challenged it  an effective avenue of debt resolution  vency and Bankruptcy Code (IBC) is
         before the Commission for Control of  for lenders leading to lower recover-  worrisome for lenders.


            18 | 2020 | MAY                                                                | BANKING FINANCE
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