The Reserve Bank of India (RBI) scrapped numerous loan restructuring programmes, asking banks to immediately identify defaults and make disclosures every Friday to the RBI credit registry, starting from February 23. The apex bank has also warned banks of monetary penalties and higher provisions if they are found to have violated the stringent new norms.
The central bank has withdrawn the existing resolution frameworks and the Joint Lenders’ Forum (JLF) with immediate effect. The extant instructions on resolution of stressed assets such as Framework for Revitalising Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR, and Scheme for Sustainable Structuring of Stressed Assets (S4A) stand withdrawn with immediate effect.
Further, lenders shall identify incipient stress in loan accounts, immediately on default, by classifying stressed assets as Special Mention Accounts (SMA). Lenders shall report credit information, including classification of an account as SMA to Central Repository of Information on Large Credits (CRILC) on all borrower entities having aggregate exposure of Rs 50 million (Rs 5 crore) and above with them. The CRILC-Main Report will be required to be submitted on a monthly basis, from April 1.