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RBI must challenge NCLAT attempt to cut its powers

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If it wasn’t bad enough that the Essar Steel resolution continues to drag in the country’s courts—for close to 550 days now—thanks to the Ruias making a last-ditch effort to retain control of the company, the National Company Law Appellate Tribunal (NCLAT) has added another twist to the NPA saga by saying IL&FS’s loans can’t be declared as NPAs without its explicit approval. If it wasn’t bad enough that NCLAT is trying to muscle in on the central bank’s territory—it is RBI that lays down guidelines on how NPAs are to be classified—the country’s Supreme Court (SC) is also examining the legal validity of RBI’s February 12 circular that makes reporting on NPAs more stringent as well as automatic; under the circular, banks have to classify all loans as stressed if there is even one day of delay in repayment and any defaulting loan where a settlement has not been reached for 180 days has to automatically be referred to the NCLT for resolution. If the country’s courts, from the NCLAT to SC, are........

© The Financial Express