New Delhi, July 12 -- Some of India's public sector banks (PSBs) are not in favour of the government now exploring the Insolvency and Bankruptcy Code route for stressed central government enterprises, fearing this would complicate debt resolution. The proposal to explore the IBC route for stressed CPSEs was raised in meetings held by the Department of Public Enterprises with other government departments, including the Prime Minister's Office, according to a government official and bank executives Mint spoke with. Executives at state-owned financial institutions said the government's backing and guarantees on Central Public Sector Enterprises (CPSE) borrowings and asset monetization help them settle claims smoothly, without having to write off large portions of debt. If the government's proposal goes through, lenders fear stressed CPSEs may head to the National Company Law Tribunal (NCLT). The central government is re-evaluating the use of IBC to wind up bankrupt CPSEs following a fresh review of the proposed closure of State Trading Corp. of India Ltd and PEC Ltd, both flagged as non-performing assets by lenders. "The NCLT platform has helped in resolution of multiple cases of stressed assets and has emerged as one of the most effective systems to deliver quick results. However, the case with CPSEs is different," said an executive with a large public sector bank, speaking on condition of anonymity because the issue relates to government policy. "In cases where both lenders and borrowers are state-owned entities, the government should look at settling entire dues of a company either through budgetary provisions or through asset monetization as several CPSEs also have big land banks and prime real estate," the executive said. Another executive with a public sector bank, a lead lender to several central public sector enterprises, said banks would have to take big cuts on such loans if their exposure to CPSEs is taken to the bankruptcy tribunal. Several loss-making CPSEs have been in this state for several years and may not find good suitors at NCLT, resulting in lower valuations and big write-offs for the lenders, the executive said, also declining to be identified. Spokespersons of the finance and textiles ministries, Department of Public Enterprises, Department of Commerce, and the PMO didn't respond to emailed queries. The Union government is weighing the closure of seven loss-making central public sector enterprises-National Textile Corp. Ltd and its five subsidiaries, and British India Corp. Ltd.Also under consideration are the restructuring, closure or liquidation of a bulk of 55 struggling CPSEs. "While concerns from lenders are understandable-particularly around timelines and the complexity of managing multiple stakeholders, including the government and employees-the IBC remains a time-tested framework for enabling revival, not just recovery," said Shalini Shrivastav, partner-deals, PwC India....