On June 13, the Reserve Bank of India (RBI) came up with an advisory asking banks to file insolvency and bankruptcy proceedings for 12 loan accounts, in which banks had an exposure of more than Rs. 5,000 crore each. This constituted about 25% of the systems bad loans whose total is estimated at Rs. 7 lakh crore.

The central bank had asked banks to file bankruptcy cases with the National Companies Law Tribunal (NCLT) within June 30. The RBI had also advised banks to make higher provisions for these accounts to be referred to the Tribunal under the Insolvency and Bankruptcy Code (IBC). According to RBI deputy governor Viral Acharya, the move was intended to improve bank provision coverage ratios and to ensure that banks are fully protected …

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