RBI gets ready to train its guns on 50 more stressed accounts

Wednesday 22nd November 2017 05:51 EST
 
 

The Reserve Bank of India may come up with a fresh list of 50 loan accounts that are either under stress or close to being classified as non-performing assets. A finance ministry official said the regulator may set a March 31 deadline for banks to find a resolution on these or commence bank proceedings against the borrowers. The accounts are in addition to the 41 already identified by the central bank. The new list of accounts came up during discussions on the recapitalisation of state-run banks.

The official said that the assets identified by the RBI have been accounted for in the £21 billion bank recap plan announced last month, and so will not bloat the capital requirement of lenders beyond what has been estimated. “We are in discussion with the RBI over the modalities of the recapitalisation scheme and this is also being looked at given that the provisioning requirements of banks may rise in these cases too.” A bank executive said, “The next list will be of those accounts where a majority of the lenders in a consortium have put them under the SMA-2 category.” This classification implies a 60 to 90 day delay in loan repayments.

Lenders have already classified most as bad loans and commenced steps for a time-bound resolution from the 41 accounts identified by the RBI. In May, the bank identified 12 stressed accounts, each with more than £500 million of outstanding loans. In August, it identified another 29 accounts that banks were asked to resolve by December 13, failing which those would have to be taken for insolvency proceedings.

A second senior bank executive said, “There has been little success on these accounts and now it looks that most of these will go to the National Company Law Tribunal.” He added that most banks were making provisions towards such accounts.


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