RBI Revised Guidelines For Stressed Assets – Detailed Overview

Dear Aspirants, Here we have given brief details about REVISED GUIDELINES FOR STRESSED ASSETS RELEASED BY RBI in the exam point of view.  Candidates those who are preparing for IBPS / SBI / PO / Clerk exam and all other competitive exams can use this.

Reason for the Revised Guidelines:

India’s Apex bank The Reserve Bank of India revised the framework for expeditious resolution against bad loans and enhances the existing guidelines with the norms specified in the Insolvency and Bankruptcy Code (IBC). The new guidelines have specified framework for early identification and reporting of stressed assets. The step is taken because of the changes made by implementation of the Amendment of the Insolvency and Bankruptcy Code (IBC) 2017.

REVISED GUIDELINES FOR STRESSED ASSETS

1) Early identification and reporting of stress:

As per the revised guidelines, the banks will be required to identify incipient stress in loan accounts, mark them immediately on default, by classifying stressed assets as special mention accounts (SMA) depending upon the period of default as given below. As soon as there is a default in the borrower entity’s account with any lender, all lenders – singly or jointly – shall initiate steps to cure the default.

SMA Sub-categories Basis for classification – Principal or interest payment or any other amount wholly or partly overdue between
SMA-0 1-30 days
SMA-1 31-60 days
SMA-2 61-90 days

2)  CRILC Report

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.5 Cr and above with them. The CRILC-Main Report will now be required to be submitted on a monthly basis effective April 1, 2018.

In addition, the lenders shall report to CRILC, all borrower entities in default (with aggregate exposure of Rs. 5 Cr and above), on a weekly basis, at the close of business on every Friday, or the preceding working day if Friday happens to be a holiday.

3) Timelines:

In respect of accounts with aggregate exposure of the lenders at Rs.2 Cr. and above on or after March 1 2018 (‘reference date’). Resolution Policy shall be implemented as per the following timelines:

  • If in default as on the reference date, then 180 days from the reference date.
  • If in default after the reference date, then 180 days from the date of first such default.

If a Resolution Policy in respect of such large accounts is not implemented as per the timelines specified above, lenders shall file insolvency application, singly or jointly, under the Insolvency and Bankruptcy Code 2016 (IBC) within 15 days from the expiry of the said timeline.

4) Supervisory Review:

Any failure on the part of lenders in meeting the prescribed timelines or any actions by lenders with intent to conceal the actual status of accounts RBI will take the Prompt Corrective Action (PCA) on those particular lenders.

These are the some of the main guidelines of the RBI for stressed assets; if there are any further changes made by the RBI we will update this post.

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