‘Revised RBI norms to clean up NPAs in one go’

Expressing the government’s firm commitment to deal with the problem of non-performing assets (NPAs), Financial Services Secretary Rajiv Kumar on Tuesday said the Reserve Bank of India’s (RBI’s) revised guidelines would help clean up the bad loan mess in one go within a strict timeframe.

“It is a wake up call to defaulters. Government is determined to clean up things in one go and not defer it. Resolution now will happen within a timeframe,” he said.

The revised framework has specified norms for “early identification” of stressed assets, timelines for implementation of resolution plans, and a penalty on banks for failing to adhere to the prescribed timelines.

The latest notification issued by the RBI on Monday has also withdrawn the existing mechanism.

The Joint Lenders’ Forum as an institutional mechanism for resolution of stressed accounts also stands discontinued, it said, adding that “all accounts, including such accounts where any of the schemes have been invoked but not yet implemented, shall be governed by the revised framework”.

“All four restructuring schemes were available earlier when IBC (Insolvency and Bankruptcy Code) was not in place. The revised norms are a more transparent system for resolution,” he said.

“RESOLUTION NOW WILL HAPPEN WITHIN A TIMEFRAME” RAJIV KUMAR, Financial Services Secretary