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NPAs (Steps taken by RBI (Scheme for sustainable structuring of stressed…
NPAs
intro
Financial Stability Report, 2017, released by the RBI, states that India’s gross NPAs stands at 9.6%.
Steps taken by RBI
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lenders identify incipient stress in loan accounts and classify the stress accounts into three categories of special mention accounts (SMA), depending upon the default of payments and report the data to the RBI under CRILC
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loan classification and reclassification - ongoing exercise. , drastic effect on the provisioning ratio and the profitability of the banks would get further eroded, unless continuous vigilance,monitoring ensured
RBI scrapped numerous loan restructuring programmes - (CDR, SDR, S4A, JLF schemes) ,
Insolvency and Bankruptcy Code - main tool to deal with defaulters
Lenders will now have to work out a resolution plan for defaults within 180 days, failing - account would be referred to the bankruptcy courts
Central bank has also toughened the reporting of defaults to the central repository- monthly from quarterly. borrower entities in default with an exposure of more than Rs. 5 crores - reported on weekly basis
way forward
Commercial banks - balancing act in the coming years with better management of credit risks, particularly in respect of restructured advances and provisions
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repayments not forthcoming as per the terms and conditions, and the assisted units are not found to be viable, steps need to be taken for fast recovery
basic statistical returns (BSR) - provides data on different dimensions of deposits and credit of the banking sector. The information is collected from bank branches through Basic Statistical Returns information system , can be tapped by the generation of tabulations needed for the purpose.