The Reserve Bank of India (RBI), has made more strict rules for bank loan defaults, in order to to push more large loan defaulters towards bankruptcy courts.

The RBI stated that, the new set of rules aims at creating a harmonized and simplified generic framework for resolution of stressed assets in view of new bankruptcy regulations.

As per the new rules, banks will have to file for insolvency proceedings against loan defaulters with 20 billion rupees or more if a resolution plan is not implemented within 180 days of the initial occurrence of default.

Further, it warned that any failure by banks to meet the given timelines, or any action they take to conceal the actual status of accounts or evergreen stressed accounts, will expose banks to potential monetary penalties and other actions.

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