Almost a year after Reserve Bank of India named Jaiprakash Associates in its second list of defaulters to be sent to NCLT, ICICI Bank is set to initiate insolvency proceedings against the debt-ridden company.

The RBI had rejected banks' plea to allow an out of court settlement for JP Associates and directed the consortium lead, ICICI Bank, to take it to NCLT, multiple sources aware of the development said. This comes after banks reached out to RBI to consider the mega restructuring agreement or MRA for the company which they argued had been approved by a majority of lenders in the consortium last year. Lenders had argued that taking JAL into NCLT would un-do all the work done to restructure the debt.

Under the Mega Restructuring Agreement signed by lenders in 2017, JP Associates' debt was to be split into three parts. Of the Rs 30,000 crore debt on its books at the time, Rs 14,000 crore was to be transferred to Ultratech Cement post the completion of JAL's cement business sale to the company.

Another Rs 10,000 crore debt was to be transferred into a Special Purpose Vehicle which would house the land assets of the company, which would be re-financed through convertible instruments at a later date. The remaining Rs 6,000 crore of debt would remain on JAL's books as the sustainable portion which would be serviced by the company.

While the sale to Ultratech Cement was completed, NCLT approval was still pending for the creation of the land SPV before the December deadline approached. RBI had asked banks to resolve all the cases on its second list by December 2017 or send them to NCLT.

"RBI has made its stance very clear; no exceptions will be made for the defaulters on the two IBC lists published by it," a source with knowledge of the matter said. He further added that ICICI Bank had begun the paperwork for sending JAL into NCLT, and should be filing the case very soon.

Another source who did not wish to be named said, "Initiating insolvency will kill the core business of EPC, and banks will stop issuing guarantees once JAL goes into NCLT...Once good people start going away and customers stop giving advances and orders, there will be no business left to resolve (under insolvency)."

Jaiprakash Associates and ICICI Bank did not immediately respond to requests for a comment .