MANU/RMIC/0096/2016

Ministry : Reserve Bank of India

Department/Board : Department of Banking Regulation

Circular No. : DBR.No.BP.BC.103/21.04.132/2015-2016
                   RBI/2015-2016/422

Date : 13.06.2016

All Scheduled Commercial Banks
(Excluding RRBs),
All-India Term-lending and Refinancing Institutions
(Exim Bank, NABARD, NHB and SIDBI)
Non-Banking Financial Companies
Securitisation Companies/ Reconstruction Companies

Scheme for Sustainable Structuring of Stressed Assets

In order to strengthen the lenders' ability to deal with stressed assets, Reserve Bank of India has been issuing, from time to time, guidelines and prudential norms on stressed assets resolution by regulated lenders.

2. Resolution of large borrowal accounts which are facing severe financial difficulties may, inter-alia, require co-ordinated deep financial restructuring which often involves a substantial write-down of debt and/or making large provisions. Citing the case of the Strategic Debt Restructuring (SDR) mechanism which provides 18 months for banks to make prescribed provisions for the residual debt and mark-to-market (MTM) provisions on their equity holding arising from conversion of debt, banks have represented for allowing more time to write down the debt and make the required provisions in cases of resolution of large accounts.

3. In order to ensure that adequate deep financial restructuring is done to give projects a chance of sustained revival, the Reserve Bank, after due consultation with banks, has decided to facilitate the resolution of large accounts, which satisfy the conditions set out in the following paragraphs.

4. Eligible Accounts

For being eligible under the scheme, the account¹ should meet all the following conditions:

(i) The project has commenced commercial operations;

(ii) The aggregate exposure (including accrued interest) of all institutional lenders in the account is more than Rs.500 crore (including Rupee loans, Foreign Currency loans/External Commercial Borrowings,);