The National Company Law Appellate Tribunal (NCLAT) on Thursday allowed banks to declare accounts of Infrastructure Leasing & Financial Services (IL&FS) and its 300 group companies non-performing asset (NPA) if they had defaulted on payments. The appellate tribunal, however, said the lenders would not be able to initiate the recovery process against these accounts or debit money from them. The lenders, the NCLAT observed, must not withdraw their support from IL&FS until a final resolution for the company and its subsidiaries was found.
The order came on a plea moved by the Reserve Bank of India (RBI), which had said that banks had an obligation to mark bad loans as NPA in the cases of non-payment, after the default of 90 days. The lenders, the RBI had pleaded, could not be relieved of this duty.
