Panel of creditors, promoters decide on debt recast & repayment schedule, says PNB

The top 12 stressed accounts identified by the Reserve Bank of India (RBI) a few weeks ago; Essar Steel has moved the Gujarat High Court against insolvency proceedings.

How will this impact the proceedings and whether more corporate will follow Essar Steel, CNBC-TV18 asked Sunil Mehta, MD & CEO of Punjab National Bank.

Below is the verbatim transcript of the interview:

Anuj: It was always likely to be a bit of an overhang. I mean if companies would challenge this is in higher court. Do you get a sense that after Essar more will follow and will this delay the proceedings?

A: Of course, it's a legal process and every company has a right, they can go to legal processes but the legal processes are meant for going to the resolution. The National Company Law Tribunal (NCLT) route was invoked to go for a resolution.

I think Essar Steel has taken a step to maybe stall the process, maybe to work out few modalities before the NCLT takes a final call on it, but I think with the resolution of the bankers because all the resolutions will have to be brought in by the committee of the creditors, may it be the intervention of court or may it be the NCLT. Ultimately it is the committee of the creditors along with the promoters which will bring out the resolutions. So, going to the legal nitty-gritty and going to the higher courts may simply delay the process of NCLT resolution.

Anuj: How much delay can we expect now because once the NCLT proceeding start - that decision can only be challenged in Supreme Court. How much delay are you expecting in this process now?

A: It is difficult. I cannot be judgemental on the decisions to be taken by the court and they may take time. Right now they have stayed the proceedings but I do not think the court -- after hearing the petition by the lenders and after hearing the submissions by the lenders, they may revert back the case to NCLT.

For entire interview, watch accompanying video.