Mumbai, Jul 9 (IANS): The Reserve Bank of India (RBI) has amended its earlier order asking banks to initiate bankruptcy proceedings against 12 companies which have outstanding loans amounting to over Rs 5,000 crore as on March 2016.

The amendment, made through a notification late on Saturday, comes after the Gujarat High Court asked the RBI to remove the stipulation on its order last month that the 12 non-performing assets (NPAs), or bad loans, would be granted priority at the National Company Law Tribunal.

"The third line of paragraph No. 5 of the press release on June 13, 2017, titled RBI identifies Accounts for Reference by Banks under the Insolvency and Bankruptcy Code (IBC), which reads as follows: '5. ...Such cases will be accorded priority by the National Company Law Tribunal (NCLT).... stands deleted," an RBI release here said.

Essar Steel, one of the 12 large NPAs identified by the RBI, had approached the Gujarat High Court for the RBI proceedings to be put on hold, contending that it was arbitrary.

Making the insolvency proceedings against Essar inoperative until July 12, the court had asked the RBI to amend its order that the NCLT would give priority to the cases identified.

In June, the RBI identified 12 accounts totaling 25 per cent of the NPAs of the banking system for insolvency proceedings.

"The IAC (Internal Advisory Committee) noted that under the recommended criterion, 12 accounts totaling about 25 per cent of the current gross NPAs of the banking system would qualify for immediate reference under IBC (Insolvency and Bankruptcy Code, 2016)," the RBI said in a statement following the IAC's first meeting here.

"The IAC recommended for IBC reference all accounts with fund and non-fund based outstanding amount greater than Rs 5,000 crore, with 60 per cent or more classified as non-performing by banks as of March 31, 2016," it said.

The IAC has been constituted under the Banking Regulation (Amendment) Ordinance, 2017, passed by the government in May, that allowed more power to the RBI to tackle the NPAs issue. It has been empowered to issue directions to commercial banks to initiate insolvency proceedings for recovering bad loans.

The NPAs of state-run banks at the end of last September rose to Rs 6.3 lakh crore (almost $100 billion), as compared to Rs 5.5 lakh crore at the end of June 2016.