On Friday, The Reserve Bank of India, released a revised circular on the restructuring of stressed accounts, after the last such circular was struck down by the Supreme Court. The Reserve Bank of India, on Friday, released a revised circular on the restructuring of stressed accounts, after the last such circular was struck down by the Supreme Court.
The new rules ease significant provisions related to the timeline that needs to be followed for resolution of stressed assets. It also replaces the diktat to refer large stressed accounts for insolvency after 180 days something that the Supreme Court had objected earlier, with increased provisions against accounts that are not resolved within a stipulated time period.
Instead, it offers an incentive to banks to take the route of the Insolvency and Bankruptcy Code by allowing for lower provisions against accounts referred for insolvency.
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The revised rules are applicable to scheduled commercial banks, systemically important non-deposit taking non-bank financial services companies and deposit-taking NBFCs, small finance banks and all-India financial institutions. The earlier set of rules applied only to banks and all-India financial institutions.