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Two months after the Supreme Court struck down its February 12 circular, the Reserve Bank of India (RBI) on Friday came out with a revised framework for resolving stressed assets wherein lenders have been given a 30-day period on whether to label an account as a non-performing asset.
“The RBI circular is a very welcome step. It has given more freedom to bankers to bring their own resolve and instead of directions, it (circular) has been propelled by provisioning requirements which will propel lenders to take timely decisions. It has created a lot of clarity for various stakeholders,” Mehta said on the sidelines of a seminar here.
Corporate Affairs Secretary Injeti Srinivas said in terms of the spirit and rigour, the latest circular is identical to the February 12 guidelines.
“Only thing is that now banks have more delegation (power) and there will be board level resolution policy and the discretion on whether you would like to take it (the case) to insolvency and bankruptcy proceedings or like to settle it outside that… (now) that decision is with the banks,” he said.
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The latest directions from the RBI retain the basic spirit of the February 12, 2018 circular as it mandates higher provisioning, bankruptcy options as well as do not allow any other resolution methods outside the new norms.
The new norms provide a framework for early recognition, reporting and time-bound resolution of stressed assets, the central bank said in a notification on Friday.