Press Esc to close
Sunday 30 August 2015
News updated at 3:23 PM IST
Weather
Max: 27.6°C
Min : 19.4°C
In Bengaluru
Sunny day
Breaking News

RBI launches discussion paper on NPAs

Mumbai, Dec 17, 2013 (PTI)
RBI launches discussion paper on NPAs. Reuters file image

To contain rising bad loans, the Reserve Bank today proposed a slew of measures, including incentives to lenders for coming together and tackling an account timely and penalising borrowers with higher interest rates in future for not cooperating for a resolution.

An RBI discussion paper, which is open for public comments till January 1, suggests an early formation of a lenders committee with timelines to agree to a plan for resolution and incentives for lenders to agree quickly to a plan through "better regulatory treatment" of stressed assets.

If bankers fail to reach a resolution plan, the assets inquestion will attract accelerated provisioning, it says.

The development comes amidst fear of bad loans hitting a record high of around Rs 2.9 trillion by the end of the fiscal or 4.5 per cent of the total banking assets. RBI Governor Raghuram Rajan had earlier expressed his resolve to correct imbalances in the system.

The paper 'Early recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy', also suggests an improvement in the current restructuring process.

Proposals include an independent evaluation of large value restructuring with a focus on viable plans and fair sharing of losses between promoters and creditors.

Promoters refusing to cooperate with the lenders in resolution of the stress will find their future borrowings becoming more expensive, the paper suggests.

On the asset sales front, the RBI has shown readiness in allowing a lender to spread any loss over two years provided the loss is fully disclosed and allowing leverage buyouts by specialised entities.

It also suggests takeout financing/refinancing possible over a longer period and not construing it as restructuring.

Apart from the liberal attitude in allowing leveraged buyouts, it says sector specific companies and private equity firms will be "encouraged" to "play active role in stressed assets market".


Go to Top

Photo Gallery
Bollywood actor Arjun Rampal showcases a creation by designer Bugatti during Lakme Fashion...

Bollywood actor Arjun Rampal showcases a creation by designer Bugatti during Lakme Fashion...

President Pranab Mukherjee honours gymnast Dipa Karmakar with Arjuna Award 2015...

President Pranab Mukherjee honours gymnast Dipa Karmakar with Arjuna Award 2015...

Malayali women light lamps at Lord Ayyappa Temple on the occasion of Onam festival...

Malayali women light lamps at Lord Ayyappa Temple on the occasion of Onam festival...

Mahants and sadhus from various Akharas arrive for the first Royal Bath of the Kumbh Mela...

Mahants and sadhus from various Akharas arrive for the first Royal Bath of the Kumbh Mela...

Indian women tie Rakhis onto the wrists of Indian BSF soldiers during the Raksha Bandhan...

Indian women tie Rakhis onto the wrists of Indian BSF soldiers during the Raksha Bandhan...

Women and Children from various segments of society tying ‘Rakhi’ to Prime Minister...

Women and Children from various segments of society tying ‘Rakhi’ to Prime Minister...

Muslim women tie rakhis to police officials on the occasion of Raksha Bandhan...

Muslim women tie rakhis to police officials on the occasion of Raksha Bandhan...

President Pranab Mukherjee honours tennis player Sania Mirza with Rajiv Gandhi Khel Ratna...

President Pranab Mukherjee honours tennis player Sania Mirza with Rajiv Gandhi Khel Ratna...

School girls tying Rakhi on the wrists of BSF personnel during celebrations of Raksha Bandhan...

School girls tying Rakhi on the wrists of BSF personnel during celebrations of Raksha Bandhan...

Ex-servicemen celebrate Raksha Bandhan even as they continue their...

Ex-servicemen celebrate Raksha Bandhan even as they continue their...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523