The Reserve Bank of India (RBI) has decided to focus on a few large stressed assets and will decide on specific resolution plans under the guidance of its internal advisory committee, deputy governor NS Vishwanathan said on Wednesday. “We have decided to focus on a few large stressed accounts under the framework and accordingly a set of accounts has been identified based on the objective criteria. The decision on specific accounts out of these to be referred for Insolvency and Bankruptcy Code (IBC) proceedings or to be restructured will be taken under the guidance of the internal advisory committee,” he said. Vishwanathan said the RBI has a strategy to deal with the resolution of large assets, and is working in a calibrated manner and hopes to see some actions coming soon.
According to him, the first meeting of the internal advisory committee is going to be conducted very shortly and the proposal to bring in the oversight committee (OC) under the aegis of the RBI and with an expanded remit has also been approved in-principle. “We have held a series of meetings with the stakeholders such as the Insolvency and Bankruptcy Board of India, banks, rating agencies, asset reconstruction companies (ARCs), private equity (PE) firms and investors. The required modifications to the restructuring guidelines are being worked out and the feedback received from these stakeholders are being built into the final outcome,” he explained.
With both the government and the central bank focused on resolving the problem of bad loans on banks’ books, Reserve Bank of India (RBI) deputy governors — Viral Acharya and Vishwanathan — recently met bank chiefs to discuss large stressed accounts. In early May, the President approved an ordinance amending the Banking Regulation Act 1949, giving more power to the RBI to deal with non-performing assets. The extent of the NPA problem can be gauged from the fact that around Rs 10 lakh crore of loans are either non-performing or stressed. The figure is roughly 12% of the total loans.