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IBC - Highlights / Catch Notes

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Corporate debtor's account correctly declared as non-performing ...


Banks justified in declaring company's loan account as NPA after failure to renew credit and provide financials.

October 10, 2024

Case Laws     IBC     AT

Corporate debtor's account correctly declared as non-performing asset (NPA) due to failure to renew cash credit facilities and provide required financial documents for review within stipulated time. Banks require regular renewal to assess borrower's risk profile, credit worthiness, and viability to ensure account remains standard. Outstanding balance continuously exceeding sanction limit/drawing power renders account "out of order" as per RBI guidelines. Corporate debtor unable to rectify irregularities pointed out by bank, justifying declaration as NPA and initiation of insolvency proceedings u/s 7. Adjudicating authority's order upheld by appellate tribunal.

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