Page 18 - Banking Finance May 2020

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