New Delhi, April 2 (IANS) The Confederation of All India Traders (CAIT) welcomed Tuesday’s Supreme Court order that struck down a controversial RBI circular that mandated they immediately resolve loans of Rs 2,000 crore and above. The court verdict would have a bearing on Rs 2.2 lakh crore of bad loans.
CAIT Secretary General Praveen Khandelwal said that it was necessary to monitor large loans given by banks.
“Even in trading activity, the owners keep a close watch on big debtors. Hundred of small debtors may fail, it may not affect the company, but one big debtor failing can shake the company’s foundation. There has to be some mechanism to ensure that big companies pay to their creditors as well as to the bankers,” he said.
“We cannot let them go scot-free. We do appreciate the sentiments of the Supreme Court. We will have to go into the details of the verdict. Monitoring of big debts by bank is very important and equally important is repayment by the creditors,” Khandelwal added.
The Reserve Bank of India’s (RBI) February 12, 2018 circular said that in the pre-Insolvency and Bankruptcy Code (IBC) stage, if a commercial entity is in default on a loan of Rs 2,000 crore or more even for a day, the bank would initiate steps for resolving, including restructuring the loan.
Companies in regulated sectors like fertiliser, power and sugar contended that they could not be treated as wilful defaulters as their prices were regulated by the government and they did not get paid on time, and therefore were not able to pay the banks on schedule.