RBI releases norms to counter bad loans

Reserve Bank wants to improve early identification and timely restructuring of assets

Mumbai: The Reserve Bank of India (RBI) on Thursday released a framework to help banks recover bad debts in an effort to ease the financial stress on lenders as the economy slows.

The RBI wants to improve early identification and timely restructuring of assets and, amongst other measures, proposed reforming the restructuring process by mandating independent evaluation of large value restructurings.

In December, the central bank had proposed rules for early detection of financial distress.

Concern over banks' bad loans has been growing among policymakers in recent months as economic growth subsided to its slowest pace in a decade.

Stressed loans in India - those categorised as bad and restructured - total $100 billion, or around Rs. 6.2 lakh crore, which is about 10 per cent of all loans.

 

Source: msn