RBI overhauls stressed asset framework, gives 180 days for NPA resolution

The Reserve Bank of India (RBI) on Monday precluded chances of banks reporting divergent asset classification norms on the same account by stating that if in a consortium a bank faced default, others must start taking action to recover the dues.This is part of a revised framework
on resolving stressed accounts, put up late on Monday night on the RBI website.The framework did away with many existing guidelines on stressed accounts while simplifying them under a single code. This means the RBI’s existing norms on Scheme for Sustainable Structuring of Stressed Assets (S4A), ownership norms on stressed accounts, guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP), Strategic Debt Restructuring Scheme (SDR) and such myriad of schemes are now part of a simpler, easy to reference, scheme.“The extant instructions on
resolution
of stressed assets such as Framework for Revitalising Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long-Term Project Loans, SDR, change in ownership outside SDR, and S4A stand withdrawn with immediate effect. Accordingly, the JLF as an institutional mechanism for resolution of stressed accounts also stands discontinued. All accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework,” the RBI said.

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