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ICICI Bank Ltd has filed an application in the National Company Law Tribunal (NCLT) against Innoventive Industries Ltd to initiate a corporate insolvency process under the new bankruptcy law.

This is the first case in India filed under the Insolvency and Bankruptcy Code, 2016, and it will provide a primer on how the new law will help tackle the banking system’s nearly Rs6.7 trillion of bad loans.

The Pune-based steel products maker, which had debt of Rs955 crore at the end of September, has contested the petition. It said that it is not in default because the industries, law and labour departments of the Maharashtra government had notified a suspension of the firm’s liabilities from 22 July 2016 to 21 July 2017.


Other forms of restructuring such as the scheme for sustainable structuring of stressed assets (S4A) haven’t been implemented in a large number of cases owing to the difficult qualifying conditions. Under S4A, banks can convert up to 50% of a company’s loans into equity or equity-like instruments.

Bankers have met at least twice in the past month to discuss various large stressed asset cases and figure out how to resolve them. The talks have not led to any decisive action.

“We have been asking the RBI to consider some tweaks in S4A, which would allow for more cases to be restructured under the norm; however, not much has moved. We can still do financial restructuring but that would come after a significant cost, which is not agreeable to a lot of bankers,” said the head of a large public sector bank, declining to be named.