India: No dilution on 12 Feb 18 circular over stressed assets: RBI

  • The Reserve Bank of India on 16 Mar 19 maintained that there is no dilution in its stand with regard to 12 Feb 19 circular on stressed assets recognition and resolution.
  • “It is reiterated that the Reserve Bank maintains its stand on all aspects of the Framework as has been consistently articulated in its communications, including the clarification given during the post-monetary policy press conference on 7 Feb 19,” the central bank said in a statement.
  • The statement comes amid reports that the RBI seems to be toeing the government line and considering relaxation of some of the aspects of the Revised Framework on Resolution of Stressed Assets issued on 12 Feb 18.
  • As the matter is sub-judice and the Supreme Court has reserved its orders on the matter, the Reserve Bank will not comment on the specific details, it said.
  • The circular directed lenders to refer any loan account over INR20bn under the Insolvency and Bankruptcy Code (IBC) if it is not resolved within 180 days of default.
  • It also underscored IBC’s status as the cornerstone of the bad loan resolution framework, scrapping all previous mechanisms. The circular imposed a one-day default rule. Banks have to treat a company as a defaulter even if it misses repayment schedule by a day.

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