SC asks banks to maintain status quo in insolvency proceedings against power firms

The Supreme Court on Tuesday asked banks to maintain status quo and not to initiate insolvency proceedings against loan defaulting power companies in the country. A bench headed by Justice R F Nariman also asked the banks not to file any insolvency cases till November when the apex court would hear the matter.

It also agreed to transfer to itself 12 cases pending before different high courts related to this issue.

The issue pertains to the Reserve Bank of India's (RBI) revised framework introduced on February 12 this year which has provisions to declare a company bankrupt even on a one-day overdue.

The RBI's new framework provides that lenders have to provide for resolution plan within 180 days in case of large account of Rs 2,000 crore and above.

In its circular, the RBI has said that if a resolution was not found by August 27, NPA accounts should be sent to bankruptcy courts.