The public sector bank has initiated action against Lanco Infra on behalf of all lenders in order to recover dues worth over Rs 18,000 crore owed to them.
Lanco sits on a debt amounts of Rs 44,364.60 crore taking the second spot after Bhushan Steel which has debt of Rs 44,478 crore.
Shares of Lanco Infratech today plummeted almost 10 per cent, extending its previous sessions' decline, after the Reserve Bank directed its lead lender IDBI Bank to initiate insolvency proceedings for the company under the Insolvency and Bankruptcy Code (IBC).
"Lanco Infratech Limited (LITL).vide letter dated June 17, 2017, intimated under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, that RBI directed IDBI Bank, the lead bank of LITL to initiate Corporate Insolvency Resolution Process (CIRP) for LITL under the Insolvency and Bankruptcy Code, 2016", the company said.
Last week, RBI-appointed Internal Advisory Committee (IAC), in its first meeting, had recommended 12 accounts totalling about 25 percent of the gross NPAs (non-performing assets) of the banking system for immediate reference under IBC.
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Lanco Infratech, the power and roads builder, became the first company to face bankruptcy proceedings among the dozen identified by the regulator as IDBI Bank has made a decision to recover its dues by taking the resolution to insolvency courts, said a person familiar with the matter. However, the central bank has not yet revealed the names of the 12 large defaulters.
The banking regulator initially presented a list of six accounts giving banks a fortnight to register the defaulting borrowers with the National Company Law Tribunal (NCLT). Among others, Alok Industries was down 10 per cent while Monnet Ispat was down 13 per cent.
Share price of Bhushan Steel, which has the highest chunk of loan, surged by almost 6% on BSE in the early trade.
Earlier May, the government notified an ordinance for speedy resolutions of NPAs in efforts to deal with the problem of India's chronic bad loans, which have surged to to Rs 9.63 lakh crore.
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