RBI may release Revised Guidelines for Resolution of Stressed Assets before 23 May

The apex bank RBI under pressure from the Supreme Court is likely to release the Revised Guidelines For Resolution Of Stressed Assets that is likely before 23 May.

The RBI will approach the Election Commission to put in place a new circular on bad debt resolution, paving the way for smooth implementation of the Insolvency & Bankruptcy Code and loan restructuring by banks. The move is crucial after the Supreme Court set aside the controversial 12 February circular issued by then-governor Urjit Patel.

RBI, through its 12 February circular, asked banks to draft resolution plans for defaulters within 180 days in cases where the exposure is above Rs 2,000 crore.  Under the RBI norms, an account is classified as a nonperforming asset (NPA) if it is not serviced for 90 days. The central bank also introduced the concept of a one-day default, under which banks have to identify incipient stress when repayments are overdue even by a day.

However, against the backdrop of the Supreme Court quashing an RBI circular, issued on February 12, 2018, a revised set of rules is under works and would be released soon, they said.

The Model Code of Conduct for the Lok Sabha polls is unlikely to have any bearing on the issuance of a revised framework for resolution of stressed assets by the Reserve Bank of India and the guidelines are expected to be announced before 23 May, sources said.

Sources said various options are being explored for rejigging the NPA framework. One of the options is giving 30-60 days more time in addition to existing 90 days before initiating resolution process for stressed accounts, they added.

NT Bureau