(LiveMint)
The Reserve Bank of India (RBI) on Monday tightened norms for bad loan resolution by setting timelines for resolving large NPAs, failing which banks will have to mandatory refer them for insolvency proceedings. It also withdrew existing debt restructuring schemes such as SDR and S4A.
RBI has issued definitions of different resolution plans and an indicative list of financial difficultly, and directed lenders to share data on certain defaulted borrowers with the central bank’s database on large exposures on every Friday. The large accounts are mainly those where banks have initiated resolution and are classified as restructured standard assets. Indian banks are sitting on a stressed assets pool of over Rs10 trillion.According to the new rules, for such accounts, where the banking sector’s aggregate exposure is Rs2,000 crore above, lenders must implement a resolution plan within 180 days, starting 1 March 2018.
