Banks want RBI to tweak S4A scheme

Mumbai, May 31: Banks have sought a few relaxation from the RBI in the current Scheme for Sustainable Structuring of Stressed Assets (S4A), including waiver of promoters’ personal guarantee, for quick resolution of stressed assets.

Bankers have also requested the regulator to allow them to extend repayment schedule and reduce rate of interest under the scheme. These are not allowed in the exiting S4A guidelines.

The present norms demand that the joint lending forum or banks obtain promoters’ personal guarantee while implementing the scheme.

“For stressed companies, the factors causing the stress are beyond the control of the promoters. Therefore, it is impractical to require furnishing of personal guarantee, especially in case of listed companies. So, the requirement of furnishing personal guarantee must be waived,” a source said.

Lenders said the purpose of S4A is to remove the financial stress of firms for which some relaxation in terms of repayment schedule or reduction in rate of interest is needed.

“The RBI should allow us to grant fresh moratorium or extension of repayment schedule or reduction of rate of interest to help companies come out of stress,” the source said.

Banks, however, said the relaxations in repayment schedule should be indicated by the techno-economic viability study.

These recommendation were made to RBI by the lenders in a meeting held on Tuesday. The meet was called to discuss stressed asset resolution plan.

LENDERS HAVE suggested the RBI to take into consideration ECB lenders, financial institutions, NBFCs under the scheme as most of the stressed firms have large exposure