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The Reserve Bank of India is expected to issue a revised circular over resolution framework of
stressed assets before the results of the 2019 Lok Sabha election are declared. The revised
circular is unlikely to attract any action on account of the Model Code of Conduct as the central
bank's monetary policy is out of its purview.
"The model code of conduct exempts RBI's monetary policy. It is unlikely to attract any action if
the RBI issues the revised (February 12) circular," PTI quoted sources as saying.
The revised circular regarding NPA resolution is in the advanced stage and would be released
before the election results are out, the news agency reported. The counting of votes for the 2019
Lok Sabha election is scheduled for May 23.
The RBI is looking into all the concerns raised by various stakeholders including banks and
power sector companies and may look to tweak the circular without diluting it completely so that
the momentum towards resolution of stressed assets is not affected, sources said.
Earlier this month, the Supreme Court had quashed the RBI circular on stressed loan recognition
and resolution of large borrowers over Rs 2,000 crore. The apex court had termed the circular,
issued on February 12, 2018, as ultra vires, or beyond the legal authority, to the provisions of the
Banking Regulations Act and the RBI Act.
RBI's February 12 circular had mandated banks to refer an NPA account for insolvency
proceedings in case a resolution was not found within 180 days. This applied to accounts with
outstanding dues to the tune of Rs 2,000 crore or more. As per RBI norms, an account is
classified as a non-performing asset (NPA) if it is not serviced for 90 days.
The PTI report said various options are being explored for reforming the NPA framework. One
of them is increasing the 90-day window by 30-60 more days before an account is classified as
NPA, it said.
The RBI might also consider providing more time to repay the loans to the concerned entities,
the report further said. This would help in reducing hardships faced by micro, small and medium
enterprises (MSMEs) to some extent.
In a report last year, the government had favoured an additional 180 days to be provided for
resolution of 34 stressed power projects with a view to avoiding potential value erosion of
operating plants. The Supreme Court quashed the circular following a petition filed by around 70
stressed companies from the power, shipping and textiles sectors.
A parliamentary panel was among the critics of the now impugned circular.
"Although the new guidelines have been termed as a harmonised and simplified generic
framework, yet they are far from being so," the standing committee on energy said in its report
tabled in Parliament last year.
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Tags: Reserve Bank | Supreme Court | RBI | NPA | February 12 Circular | Stressed

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MORE FROM THE AUTHOR


Coronavirus lockdown: 'Hope govt will announce stimulus packages soon,' says Nasscom
The Reserve Bank of India is expected to issue a revised circular over resolution framework of
stressed assets before the results of the 2019 Lok Sabha election are declared. The revised
circular is unlikely to attract any action on account of the Model Code of Conduct as the central
bank's monetary policy is out of its purview.
"The model code of conduct exempts RBI's monetary policy. It is unlikely to attract any action if
the RBI issues the revised (February 12) circular," PTI quoted sources as saying.
The revised circular regarding NPA resolution is in the advanced stage and would be released
before the election results are out, the news agency reported. The counting of votes for the 2019
Lok Sabha election is scheduled for May 23.
The RBI is looking into all the concerns raised by various stakeholders including banks and
power sector companies and may look to tweak the circular without diluting it completely so that
the momentum towards resolution of stressed assets is not affected, sources said.
Earlier this month, the Supreme Court had quashed the RBI circular on stressed loan recognition
and resolution of large borrowers over Rs 2,000 crore. The apex court had termed the circular,
issued on February 12, 2018, as ultra vires, or beyond the legal authority, to the provisions of the
Banking Regulations Act and the RBI Act.
RBI's February 12 circular had mandated banks to refer an NPA account for insolvency
proceedings in case a resolution was not found within 180 days. This applied to accounts with
outstanding dues to the tune of Rs 2,000 crore or more. As per RBI norms, an account is
classified as a non-performing asset (NPA) if it is not serviced for 90 days.
The PTI report said various options are being explored for reforming the NPA framework. One
of them is increasing the 90-day window by 30-60 more days before an account is classified as
NPA, it said.
The RBI might also consider providing more time to repay the loans to the concerned entities,
the report further said. This would help in reducing hardships faced by micro, small and medium
enterprises (MSMEs) to some extent.
In a report last year, the government had favoured an additional 180 days to be provided for
resolution of 34 stressed power projects with a view to avoiding potential value erosion of
operating plants. The Supreme Court quashed the circular following a petition filed by around 70
stressed companies from the power, shipping and textiles sectors.
A parliamentary panel was among the critics of the now impugned circular.
"Although the new guidelines have been termed as a harmonised and simplified generic
framework, yet they are far from being so," the standing committee on energy said in its report
tabled in Parliament last year.
ALSO READ:RBI to issue new Rs 20 denomination banknote with greenish-yellow
color; check features
ALSO READ:RBI boost for yet-to-be-popular municipal bonds
Read More
DO YOU LIKE THIS STORY?
 1   0
YoutubeShare
 PRINT

COMMENT

Tags: Reserve Bank | Supreme Court | RBI | NPA | February 12 Circular | Stressed

o Previous Story

Sales of renewable energy certificates drop by 65% to 3.68 lakh in April

o Next Story

Govt may ban Deloitte over allegations of fraud in IL&FS audit

Auto driver needs Rs 15 lakh to save his 2-year-old son Ketto|

Get 1 Crore Life Cover @ 490/Month. Secure Your Family Future Now. Taalo Nahi, Le
Daalotermlife.policybazaar.com|
Sponsored

Born Between 1965-1985? Get Term Life Insurance Worth ₹1 Cr at

Where Might The Market Go In The Next Few MonthsMotilal Oswal Mutual funds|
Sponsored