NPAs- RBI New Circular to Curb Issue

RBI npas

On RBI circular, since the Supreme Court revoked the Reserve Bank of India (RBI) February 12, 2018, circular related to resolve of non-performing assets (NPAs), a new one that RBI has released. Moreover, the one released on June 7 does not contain points of February 12 Circular, such as mandatory reference of stressed account to the National Company Law Tribunal (NCLT)

For large accounts, post-restructuring, and residual debt authorized credit rating agencies required to do credit evaluation. RBI has kept this provision in its new circular.

Credit rating agencies licensed by RBI needs to provide credit evaluation of residual debts and for big accounts. RBI has not removed this provision from the circular.

Also, with big accounts that have average exposure of above 2,000 crores, a reference date was 1st March 2018. And If the resolution was not implemented within 180 days of the reference date lenders are required to file an insolvency application under the Insolvency & Bankruptcy Code (IBC). And it has to be registered within 15 days from the date of expiry. The central reserve bank has also removed this provision.

RBI has suggested a new plan in which all lenders put a resolution plan. And the borrower will have to agree. In which lenders will decide the debt recovery strategy that would include restructuring, loan sale, legal action for debt recovery and change in ownership.

It a matter to see how lender and borrower follow this procedure within the time limit which is 30 days. Because as per guideline lenders will place a resolution plan within 30 days in front of borrowers

what is NPA

click to read more about Supreme court revocation

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