InvestorQ : Is it true that the RBI has cautioned the PSU banks on personal insolvencies after the Anil Ambani case?
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Is it true that the RBI has cautioned the PSU banks on personal insolvencies after the Anil Ambani case?

Answer
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Anamika Sodhani answered.
2 months ago


After the recent stay secured by Anil Ambani in the personal insolvency case, the Ministry of Finance has asked PSU banks to closely monitor cases where it may be necessary to file individual insolvency petitions against personal guarantors to avoid such issues later.

It may be recollected that SBI had approached the NCLT to initiate insolvency proceedings against Anil Ambani, Chairman of ADAG group, and a guarantor to loans worth Rs.1200 crore. These loans later became non-performing assets of NPAs in the books of SBI.

It has been noted in the MOF notification dated 26 August that the IBC Act, empowers the creditors to file insolvency applications against personal guarantors to corporate debts. However, practically it may be necessary to monitor such events closely.

The banks may also consider setting up a centralized database of such personal guarantees so that all banks may take appropriate risk management measures before dealing with them. This would also act as a deterrent for errant borrowers and errant guarantors.