In a welcome development, the Supreme Court on Tuesday declared as unlawful RBIs February 12, 2018 circular, which ordered banks to refer defaulting companies for insolvency proceedings if they missed repayments even one day beyond the 180-day grace period.
The Bench led by Justice Rohinton Nariman said that in light of Section 35AA of the Banking Regulation Act, the RBI could not have issued a generic circular mandating reference under the Insolvency and Bankruptcy Code.
The controversial circular issued by former RBI Governor Urjit Patel, which targeted companiesmostly in power, sugar and fertilizer sectorswith loans of Rs 2,000 crore or more, had stunned the industry.
Crucial infrastructure projects such as coal-fired pow…
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