Press Esc to close
Wednesday 27 July 2016
News updated at 12:44 PM IST
Weather
Max: 29.1°C
Min : 20.1°C
In Bengaluru
Sunny day

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
Army personnel pay tribute to jawans who died in Kargil War on Kargil Vijay Diwas in Kozhikode on ..

Army personnel pay tribute to jawans who died in Kargil War on Kargil Vijay Diwas in Kozhikode on ..

Specially abled kids from Om Creations Trust (NGO) make handcrafted rakhis as part of a campaign ...

Specially abled kids from Om Creations Trust (NGO) make handcrafted rakhis as part of a campaign ...

Punjab Police and BSF Jawans patrol after they captured suspected terrorists in Jalandhar's Khurla..

Punjab Police and BSF Jawans patrol after they captured suspected terrorists in Jalandhar's Khurla..

A couple carry their mother Runuka Devi on a palanquin to Gola Gokarannath from Kachla Ganga Ghaat..

A couple carry their mother Runuka Devi on a palanquin to Gola Gokarannath from Kachla Ganga Ghaat..

Police fire tear gas shells to disperse the rally, taken out from downtown city, on way to Lal ...

Police fire tear gas shells to disperse the rally, taken out from downtown city, on way to Lal ...

Members of National Human Rights and crime control organisation paying tributes to the soldiers ...

Members of National Human Rights and crime control organisation paying tributes to the soldiers ...

Policemen stands guard at Budshah Chowk after the 17-day old curfew was lifted in Srinagar on ...

Policemen stands guard at Budshah Chowk after the 17-day old curfew was lifted in Srinagar on ...

Vendors sell fruit at M A Road after curfew was lifted after 17-day in Srinagar on Tuesday...

Vendors sell fruit at M A Road after curfew was lifted after 17-day in Srinagar on Tuesday...

Legendary Santoor player Pandit Shivkumar Sharma being felicitated during an event...

Legendary Santoor player Pandit Shivkumar Sharma being felicitated during an event...

Members of the Indian archery team, the first to reach Brazil for the upcoming Olympics...

Members of the Indian archery team, the first to reach Brazil for the upcoming Olympics...

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