Indias supreme court has struck down tough central bank rules on corporate defaults that had been designed to address the banking industrys chronic bad loan problem.
The Reserve Bank of India issued a directive in February last year ordering banks to declare a default on the first day of delayed loan repayments from large corporate clients. If the situation was not resolved within 180 days, the RBI said, banks should launch bankruptcy proceedings under the countrys insolvency code.
The directive came after banks proved slow to take action under the code, which became law in 2016 and mandates liquidation of insolvent companies after nine months if no buyer is found.
On Tuesday, however, the supreme court ruled that the RBI had gone beyo…
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