RBI hikes provisioning requirement for restructured loan to 5%
The announcement comes less than three months after the Reserve Bank raised provisioning on restructured accounts to 2.75 per cent to 2 per cent to mitigate risk attached with such loans.
"It has now been decided to increase the provision to five per cent in respect of new restructured standard accounts (flow) with effect from April 1, 2013 and in a phased manner for the stock of restructured standard accounts as on March 31, 2013," RBI said in a notification.
For accounts restructured prior to March 31, 2013, banks would have to make provision of 3.75 per cent in the first phase effective March 31, 2014.
The increase of one per cent additional provisioning in case of restructured accounts prior to March 31, 2013 will be spread over the four quarters of 2013-14, it said.
In the next phase it will be 5 per cent with effect from March 31, 2015. The additional provision would be spread over the four quarters of 2014-15, it added.
"It has been decided that promoters' personal guarantee should be obtained in all cases of restructuring and corporate guarantee cannot be accepted as a substitute for personal guarantee," it said.
However, corporate guarantee can be accepted in those cases where the promoters of a company are not individuals but other corporate bodies or where the individual promoters cannot be clearly identified, it
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