RBI Turns On The Screws

RBI Turns On The Screws

- M.G. Arun

With non-performing assets (NPAs) in the banking sector ballooning beyond Rs 8 lakh crore, the Reserve Bank of India (RBI) has decided to crack the whip on banks going slow in resolving big cases of bad loans, setting a deadline for resolution of such cases. On February 12, the RBI set a deadline of six months for banks to resolve cases where the NPAs stood at Rs 2,000 crore or more, failing which they will have to compulsorily refer such cases for insolvency proceedings to the National Company Law Tribunal (NCLT). The central bank has also notified graded resolution plans along with an indicative list of financial difficulty, and directed banks to share data on defaulters with the RBI on a weekly basis. For accounts with exposures of Rs 100 crore to Rs 2,000 crore, a timeline for resolution will be announced over a two-year period.

The central bank has withdrawn the existing resolution frameworks and the Joint Lenders’ Forum (JLF) has also been discontinued. The JLF is a dedicate