NCLT or National Company Lat Tribunal was the recent news headline sensation as the Reserve Bank of India or RBI listed several big Non Performing Assets or NPA accounts and started the insolvency procedure.
It is certainly an additional responsibility on the shoulders of NCLT, but with the increases in the infrastructure, it will be able to handle it without any difficulty.
Sticky debts or stressed accounts, whatever you call them; they are undoubtedly burden on the financial institutes. Though they are the reality of life, it is always better to keep the magnitude as low as possible.
NCLT speeds up the npa account settlement process and helps the bankers in managing the financial health better.
As far as the process of npa recovery is concerned, financial institution has to file an application with the tribunal. It has to mention all the facts about the case.
After looking into the facts and getting fully satisfied with it, NCLT accepts and admits the case and appoints an interim insolvency professional.
As per the rule, there are 180 days required for completing corporate insolvency process. In the scenario of it not completing in the stipulated time, an extension of 90 days can be given.
No further extension is granted in any case.
Typically, in the case of loan settlement of more than 1 Lakh rupees, a debtor or creditor has to make an application to NCLT.
Every detail of the default has to be submitted, and appropriate evidence has to be given to the tribunal. On satisfaction of the evidence, the tribunal issues an application admission receipt.
The appointment of interim insolvency professional is for one month. Within the period of one month, the promoters of the company go out, and the board of the directors gets suspended.
The resolution professional takes over the company, and he becomes the de facto Managing Director of the company. It is his responsibility to announce the same to the public and invite their claims of recovery.
He also makes a list of all the claimants, and a COC (Committee of Creditors) is formed. The COC has all the authority of deciding about the continuation of the interim professional or to get a new one.
NCLT makes the recovery of sticky debts efficient and effective. Since all these tasks are supposed to be carried out within one month, the speed of npa loan takeover is incredibly fast.