RBI new rule 2018: 180-day deadline for banks to resolve bad loans
New Delhi : The Reserve Bank of India (RBI) on Monday set a deadline for 180 days to resolve large bad loans, failing in doing so the loans will be transferred for insolvency proceedings.
The RBI has issued a notification to lenders and has asked them to share the list of defaulters with the central bank's database on large exposures on every Friday.
As per new rules issued by RBI all banks with an amount of Rs 2000 crores, must implement resolution plan within 180 days, starting from March 1, 2018.
"If a RP (resolution plan) in respect of such large accounts is not implemented as per the timelines specified, lenders shall file insolvency application, singly or jointly, under the Insolvency and Bankruptcy Code 2016 (IBC) within 15 days from the expiry of the said timeline," the RBI said in notification issued late on Monday.
A penalty will be imposed on the banks if they do not adhere to the set deadline by Central Bank.
"Any failure on the part of lenders in meeting the prescribed timelines or any actions by lenders with an intent to conceal the actual status of accounts or evergreen the stressed accounts will be subjected to stringent supervisory / enforcement actions as deemed appropriate by the Reserve Bank, including, but not limited to, higher provisioning on such accounts and monetary penalties," it said.
RBI said that for other accounts with aggregate exposure below Rs2,000 crore but and, at or above Rs100 crore, it intends to announce, over a two-year period, reference dates for implementing the resolution plans to ensure calibrated, time-bound resolution of all such accounts in default.
"It is, however, clarified that the said transition arrangement shall not be available for borrower entities in respect of which specific instructions have already been issued by the Reserve Bank to the banks for reference under IBC. Lenders shall continue to pursue such cases as per the earlier instructions," the RBI said.
Banks must also vet the resolution plan through credit rating agencies for independent credit evaluation (ICE) of residual debt. Accounts with aggregate exposure of Rs500 crore there must require two such ICEs, and one for in other cases.
