RBI reworks NPA reporting norms

Reserve Bank of India issues new circular on bad loan reporting and resolution post market hours on Friday. RBI's focus is on early recognition and reporting of default in respect of banks, FIs and NBFCs. 

Earlier, the Supreme Court of India had scrapped down RBI's circular dated February 12, 2018, for the resolution of default accounts which were heard in various tribunals under the Insolvency and Bankruptcy Code (IBC). The new circular will replace these norms.

Here are the highlights:

o  RBI scraps away NPA reporting following 1-day of default

o  Gives borrower 30-day grace period

o  Banks can review borrower account within 30 days of default

o  Lenders, banks can initiate a resolution plan before a loan is defaulted

o  Banks may start resolution or bankruptcy (IBC) process within 30 days of default

o  Lenders to have complete discretion on resolution plan

o  New norms named Prudential framework for resolution of stressed loans

o  Definition of financial difficult aligned to BASEL norms

o  RBI mulls disincentives like additional provisioning for delay in reporting NPAs 


In anticipation of the new circular, the BSE Sensex closed in the green on Friday at 39,615.90, up by 86.18 points or 0.22 per cent.