December 26, 2020 0Comment

b. 9. 5. The finance charge component of finance income [as defined in ‘AS 19 ­Leases’ issued by the Council of the Institute of Chartered Accountants of India (ICAI)] on the leased asset which has accrued and was credited to income account before the asset became non ­performing, and remaining unrealised, should be reversed or provided for in the current accounting period. (ii) Restructured accounts classified as standard advances will attract a higher provision (as prescribed from time to time) in the first two years from the date of restructuring. Banks should secure their interest by way of proper documentation and security creation, etc. However, the stand-still clause will be applicable only to any civil action either by the borrower or any lender against the other party and will not cover any criminal action. 13.1 Internationally, project finance lenders sanction a ‘standby credit facility’ to fund cost overruns if needed. (iv) Loans to farmers up to 50 lakh against pledge / hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months. (a) Of these, number of accounts restructured during the year. Where the assets fall in the above category, the assets will not be removed from the books of the bank/ FI but realisations as and when received will be credited to the asset account. If the acquisition is being carried out by a special purpose vehicle (domestic or overseas), the bank should be able to clearly demonstrate that the acquiring entity is part of a new promoter group with sufficient expertise in the field of operation; The new promoters should own at least 51 per cent of the paid up equity capital of stake in the acquired project. 100 percent of the extent to which the finance is not secured by the realisable value of the leased asset, should be provided for. 5.1.2 The Category 1 CDR system will be applicable only to accounts classified as 'standard' and 'sub-standard'. (i) All other aspects of restructuring of project loans before commencement of commercial operations would be governed by the provisions of Part B of this Master Circular on Prudential norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances. These guidelines have become effective from April 1, 2014. However, their exposures to India will be excluded. 17.2.1 The accounts classified as 'standard assets' should be immediately re- classified as 'sub-standard assets' upon restructuring. 15. (iv) Banks, if deemed fit, may extend DCCO beyond the respective time limits stipulated at paragraphs 4.2.15.3 (ii) above; however, in that case, banks will not be able to retain the ‘standard’ asset classification status of such loan accounts. The norms of asset classification will have to be followed by the concerned bank/financial institution in whose books the account stands as balance sheet item as on the relevant date. Banks may determine the pricing of the loans at each stage of the project term loan or refinancing debt facility, commensurate with the risk at each phase of the loan, and such pricing should not be below the Base Rate of the bank; viii. 5.2.1 Reference to Corporate Debt Restructuring System could be triggered by (i) any or more of the creditor who have minimum 20% share in either working capital or term finance, or (ii) by the concerned corporate, if supported by a bank or financial institution having stake as in (i) above. 1000 million and above. Continuous irregularities in cash credit/overdraft accounts such as inability to maintain stipulated margin on continuous basis or drawings frequently exceeding sanctioned limits, periodical interest debited remaining unrealised; Repeated undue delay in making timely payment of instalments of principal and interest on term loans; Undue delay in meeting commitments towards payments of installments due, crystallized liabilities under LC/BGs, etc. Banks have been advised by IBA in this regard vide its circular No. The fair value of the term loan components (Working Capital Term Loan and Funded Interest Term Loan) would be computed as per actual cash flows and taking the term premium in the discount factor as applicable for the maturity of the respective term loan components. Such STP mechanism shall seamlessly take into account all the facilities availed by a given customer (in case of advances) and all the instruments of an entity (where bank has made investments in an entity), maintained across multiple systems of the bank without any manual intervention. Format for Computing Countercyclical Provisioning Buffer, Organisational Framework for Restructuring of Advances Under Consortium / Multiple Banking / Syndication Arrangements, A. The UCBs having total assets of over Rs 2,000 crore as on March 31, 2020, will be required to implement the system-based asset classification from June 30, 2021, an RBI circular said. However, for the purpose of asset classification and income recognition, the new loans would be treated as standard assets. If the provisions required to be held on an aggregate basis are less than the provisions held as on November 15, 2008, the provisions rendered surplus should not be reversed to Profit and Loss account; but should continue to be maintained at the level existed as on November 15, 2008. The banking regulator said this must be completed by June 2021, according to a notification on its website. Banks should secure their interest by way of proper documentation and security creation, etc. The Core Group shall recommend exceptional BIFR cases on a case-to-case basis for consideration under the CDR system. 17.2.2 The non-performing assets, upon restructuring, would continue to have the same asset classification as prior to restructuring and slip into further lower asset classification categories as per extant asset classification norms with reference to the pre-restructuring repayment schedule. Banks are required to extinguish all available means of recovery before writing off any account fully or partly. Thus, the two types of the provisions are not substitute for each other. 37.2 It is reiterated that lenders should carry out their independent and objective credit appraisal in all cases and must not depend on credit appraisal reports prepared by outside consultants, especially the in-house consultants of the borrowing entity. Majority of the banks had achieved PCR of 70 percent and had represented to RBI whether the prescribed PCR is required to be maintained on an ongoing basis. 38.1 In terms of circular DBOD.No.CAS(COD)BC.142/WGCC-80 December 8, 1980 on ‘Report of the Working Group to Review the System of Cash Credit – Implementation’, banks were advised that before opening current accounts/sanctioning post sale limits, they should obtain the concurrence of the main bankers and/or the banks which have sanctioned inventory limits. Therefore, for the purpose of arriving at the erosion in the fair value, the NPV calculation of the portion of principal not converted into debt/equity has to be carried out separately. As regards the regulatory treatment of ‘funded interest’ recognised as income and ‘conversion into equity, debentures or any other instrument’ banks should adopt the following: a) Funded Interest: Income recognition in respect of the NPAs, regardless of whether these are or are not subjected to restructuring/ rescheduling/ renegotiation of terms of the loan agreement, should be done strictly on cash basis, only on realisation and not if the amount of interest overdue has been funded. In case the overdues arising from forward contracts and plain vanilla swaps and options become NPAs, all other funded facilities granted to the client shall also be classified as non-performing asset following the principle of borrower-wise classification as per the existing asset classification norms. A working capital borrowal account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower's financial position is satisfactory. The principles and prudential norms laid down in this paragraph are applicable to all advances including the borrowers, who are eligible for special regulatory treatment for asset classification as specified in para 20. 7. 2.1 All borrowal accounts, including temporary overdrafts, irrespective of size, sector or types of limits, shall be covered in the automated IT based system (System) for asset classification, upgradation, and provisioning processes. (c) Project Loans for Non-Infrastructure Sector (Other than Commercial Real Estate Exposures). This will apply to Government guaranteed accounts also. 15 percent of the sum of the net investment in the lease and the unrealised portion of finance income net of finance charge component. The above structure is applicable to new loans to infrastructure projects and core industries projects sanctioned after July 15, 2014. The JLF must periodically review the account for achievement/non-achievement of milestones and should consider initiating suitable measures including recovery measures as deemed appropriate. 5.3.4 One of the most important elements of Debtor-Creditor Agreement would be 'stand still' agreement binding for 90 days, or 180 days by both sides. 7.1 These guidelines would be applicable to banks, FIs and NBFCs purchasing/ selling non performing financial assets, from/ to other banks/FIs/NBFCs (excluding securitisation companies/ reconstruction companies). The RBI would provide a standstill on asset classification for standard bank accounts, implying these couldn't be classified as bad assets after stipulated 90-day period. In such cases the consequential shift in repayment schedule by equal or shorter duration (including the start date and end date of revised repayment schedule) than the extension of DCCO would also not be considered as restructuring provided all other terms and conditions of the loan remain unchanged or are enhanced to compensate for the delay and the entire project debt amortisation is scheduled within 85%3 of the initial economic life of the project as prescribed in paragraph 10.2 (iii) above; vi. Banks should clearly establish that the acquirer does not belong to the existing promoter group; and. In such a case the term premium used while calculating the present value of cash flows after restructuring would be higher than the term premium used while calculating the present value of cash flows before restructuring. The classification of all other assets of such clients will, however, continue to be governed by the extant IRAC norms. This mechanism will be applicable to all the borrowers which have funded and non-funded outstanding up to Rs.10 crore under multiple /consortium banking arrangement. Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries (Loans sanctioned before July 15, 2014). Alternatively, they can be treated as part of Tier II capital within the overall ceiling of 1.25% of total risk weighted assets. 50% of 15%, upfront and the balance within a period of one year. Equity instrument classified as NPA should be valued at market value, if quoted, and in case where equity is not quoted, it should be valued at Re. Depending upon the duration of crops raised by an agriculturist, the above NPA norms would also be made applicable to agricultural term loans availed of by him. 4. Banks are advised to compute their Gross Advances, Net Advances, Gross NPAs and Net NPAs, as per the format in Annex -1. The commitment should be supported with identifiable cash flows within the required time period and without involving any loss or sacrifice on the part of the existing lenders. Accordingly guidelines on sale/purchase of non ­performing assets have been formulated and furnished below. Provisions held in the case of NPA Accounts as per asset classification (including additional Provisions for NPAs at higher than prescribed rates). Restructuring would normally involve modification of terms of the advances / securities, which would generally include, among others, alteration of repayment period / repayable amount/ the amount of instalments / rate of interest (due to reasons other than competitive reasons). General Principles and Prudential Norms for Restructured Advances. However, this will require reporting to RBI (reporting to DBS, CO every month along with the regular DSB Return on Asset Quality) and disclosure by banks in the Notes to Accounts in Annual Financial Statements. It is observed that some banks are resorting to technical write off of accounts, which reduces incentives to recover. 37.6 It is reiterated that while carrying out the credit appraisal, banks should verify as to whether the names of any of the directors of the companies appear in the list of defaulters/ wilful defaulters by way of reference to DIN/PAN etc. 15.4 The CDR Mechanism (Annex - 4) will also be available to the corporates engaged in non-industrial activities, if they are otherwise eligible for restructuring as per the criteria laid down for this purpose. The cost in operating the CDR mechanism including CDR Cell will be met from contribution of the financial institutions and banks in the Core Group at the rate of Rs.50 lakh each and contribution from other institutions and banks at the rate of Rs.5 lakh each. With a view to reflecting a higher element of inherent risk which may be latent in entities whose obligations have been subjected to restructuring / rescheduling either by banks on their own or along with other bankers / creditors, the unrated standard / performing claims on corporates should be assigned a higher risk weight of 125% until satisfactory performance under the revised payment schedule has been established for one year from the date when the first payment of interest / principal falls due under the revised schedule. At the time of divestment of their holdings to a ‘new promoter’, banks may refinance the existing debt of the company considering the changed risk profile of the company without treating the exercise as ‘restructuring’ subject to banks making provision for any diminution in fair value of the existing debt on account of the refinance. The securities must provide for part or full prepayment in the event the SC / RC sells the asset securing the security before the maturity date of the security. The intention is not to encourage a particular resolution option, e.g. 5.1.2 In conformity with the prudential norms, provisions should be made on the non ­performing assets on the basis of classification of assets into prescribed categories as detailed in paragraphs 4 supra. Such decision should be well documented and approved by the majority of the JLF members (minimum of 75% of creditors by value and 60% of creditors by number); iv. 6. The above investment should be carried in the books of the bank / FI at the price as determined above until its sale or realization, and on such sale or realization, the loss or gain must be dealt with in the same manner as at (ii) and (iii) above. In case of exceptions in rare circumstances, such changes should be duly approved at an appropriate level and documented. On a review, it has been decided that banks will be permitted to report their SMA-2 accounts and JLF formations on a weekly basis at the close of business on every Friday. 38.2 RBI reiterates the above instructions regarding restrictions placed on banks on extending credit facilities including non-fund based limits, opening of current accounts, etc. The provisioning requirement for unsecured ‘doubtful’ assets is 100 per cent. CDR Empowered Group will meet on two or three occasions in respect of each borrowal account. The repayment(s) at the end of each refinancing period (equal in value to the remaining residual payments corresponding to the Fresh Loan Amortisation Schedule) could be structured as a bullet repayment, with the intent specified up front that it will be refinanced. In such cases the terms of sale should provide for a report from the SC/RC to the bank/ FI on the value realised from the asset. ii) It was observed that on a few occasions, there were divergences in the calculation of diminution of fair value of accounts by banks. 5.3.1 CDR is a non-statutory mechanism which is a voluntary system based on Debtor- Creditor Agreement (DCA) and Inter-Creditor Agreement (ICA). Prudential norms for banks/ FIs for the sale transactions. i. The terms ‘net investment in the lease’, ‘finance income’ and ‘finance charge’ are as defined in ‘AS 19 ­Leases’ issued by the ICAI. Accordingly, to the extent payment has been received from the EXIM Bank, the advance may not be treated as a non­ performing asset for asset classification and provisioning purposes. 3.4 The CDR Empowered Group would be mandated to look into each case of debt restructuring, examine the viability and rehabilitation potential of the Company and approve the restructuring package within a specified time frame of 90 days, or at best within 180 days of reference to the Empowered Group. i) A bank which is purchasing/ selling non­ performing financial assets should ensure that the purchase/ sale is conducted in accordance with a policy approved by the Board. Instructions contained in our circular DBOD.BP.BC.No.79/21.04.018/2009-10 dated March 15, 2010 on ‘Additional Disclosures by banks in Notes to Accounts’ specifically require banks to disclose the amounts written off during the year while giving details of movement in non-performing assets (NPAs). B. RBI asks UCBs to implement system-based asset classification from June 2021 The UCBs having total assets of over Rs 2,000 crore as on March 31, 2020, will be required to implement the system-based asset classification from June 30, 2021, an RBI circular said 3.3.1 Interest realised on NPAs may be taken to income account provided the credits in the accounts towards interest are not out of fresh/ additional credit facilities sanctioned to the borrower concerned. 3. Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site. In that case, in terms of extant instructions contained in paragraph 4.2.15 of this Master, mere extension of DCCO would not be considered as restructuring subject to certain conditions, if the revised DCCO falls within the period of two years and one year from the original DCCO for infrastructure and non-infrastructure projects respectively. iii) The guidelines prescribed above at 4.2.20 (i) & (ii) do not apply to. As mentioned in paragraph 20.2.3 in Part – B of this Master Circular, the special asset classification benefit as above have been withdrawn for all restructurings with effect from April 1, 2015 with the exception of provisions related to changes in Date of Commencement of Commercial Operations (DCCO) in respect of infrastructure and non-infrastructure project loans. However, such an exercise would be treated as ‘restructuring’ and the assets would continue to be treated as ‘non-performing asset’. The sale price should generally not be lower than the net present value arrived at in the manner described above. 3.6 The decisions of the CDR Empowered Group shall be final. Once the account comes out of NPA status, it will be eligible for refinancing in terms of these instructions; viii. The Board shall lay down policies and guidelines covering, inter alia. The assessment made by the inspecting officer of the RBI is furnished to the bank to assist the bank management and the statutory auditors in taking a decision in regard to making adequate and necessary provisions in terms of prudential guidelines. Data input shall be effected only after authentication and authorisation. 28.1 Prudential guidelines on restructuring of advances as contained in Part B of this Master Circular lay down detailed methodology and norms for restructuring of advances under sole banking as well as multiple/ consortium arrangements. (ii) The asset classification status of an existing exposure (other than purchased financial asset) to the same obligor in the books of the purchasing bank will continue to be governed by the record of recovery of that exposure and hence may be different. The other direct loans & advances, if any, granted by the bank to the member borrower of a PACS/ FSS outside the on­-lending arrangement will become NPA even if one of the credit facilities granted to the same borrower becomes NPA. at least 75% (by value) of the banks / FIs who are under the consortium / multiple banking arrangements agree to the sale of the asset to SC/RC. This approach would provide the necessary flexibility and facilitate timely intervention for debt restructuring. 30.3 As a measure to ensure adherence to the proposals made in these guidelines as also to impose disincentives on borrowers for not maintaining credit discipline, accelerated provisioning norms (as detailed in paragraph 32 below) are being introduced. (iii) Restructured accounts classified as non-performing assets, when upgraded to standard category will attract a higher provision (as prescribed from time to time) in the first year from the date of upgradation. 3.3.2 In the absence of a clear agreement between the bank and the borrower for the purpose of appropriation of recoveries in NPAs (i.e. 4.2.5 Upgradation of loan accounts classified as NPAs. Therefore, it has been decided that the viability should be determined by the banks based on the acceptable viability parameters and benchmarks for each parameter determined by them. Within 120 days from the date of receipt of application by the bank in cases other than those restructured under the CDR Mechanism. Henceforth, banks should include necessary covenants in all loan agreements, including restructuring, supported by necessary approvals/authorisations (including special resolution by the shareholders) from the borrower company, as required under extant laws/regulations, to enable invocation of SDR in applicable cases; viii. In addition, an elaborate institutional mechanism was laid down for accounts restructured under CDR Mechanism. 4.2.19 Advances under rehabilitation approved by Board for Industrial and Financial Reconstruction (BIFR)/Term Lending Institutions (TLIs). With this principle in view and also to ensure more ‘skin in the game’ of promoters, JLF/Corporate Debt Restructuring Cell (CDR) may consider the following options when a loan is restructured: 42. 12.2 Further, in terms of DBOD.No.BP.BC.144/21.04.048-2000 dated February 29, 2000 on ‘Income Recognition, Asset Classification, Provisioning and other related matters and Capital Adequacy Standards - Takeout Finance’, banks can refinance their existing infrastructure project loans by entering into take-out financing agreements with any financial institution on a pre-determined basis. One such mechanism could be to seek monthly statements containing account-wise details from the servicing agent to facilitate classification of the portfolio into different asset classification categories. 4.2.3 Availability of security / net worth of borrower/ guarantor. 33.2 In terms of our Master Circular on Wilful Defaulters mentioned above, in case any falsification of accounts on the part of the borrowers is observed by the banks / FIs, and if it is observed that the auditors were negligent or deficient in conducting the audit, banks should lodge a formal complaint against the auditors of the borrowers with the Institute of Chartered Accountants of India (ICAI) to enable the ICAI to examine and fix accountability of the auditors. Guidelines on restructuring of all other advances. The CDR Mechanism is an organizational framework institutionalized for speedy disposal of restructuring proposals of large borrowers availing finance from more than one banks / FIs. The Reserve Bank of India (RBI) has asked large urban cooperative banks to undertake the system-based asset classification from 30 June 2021, to improve efficiency and transparency. para 20.2.2.iv). If there are any generic user-ids used, it should only be used under exceptional circumstances and such ids should be mandatorily mapped to the employee ID of the user to fix accountability of the activities carried-out under the generic ID. Prudential Norms for Conversion of Unpaid Interest into 'Funded Interest Term Loan' (FITL), Debt or Equity Instruments. 4.2.8 Advances under consortium arrangements. However, it may be shifted to another place if considered necessary, as may be decided by the Standing Forum. 21.5 Banks may consider incorporating in the approved restructuring packages creditor’s rights to accelerate repayment and the borrower’s right to pre pay. This exemption from classification of Government guaranteed advances as NPA is not for the purpose of recognition of income. The CDR Cell will prepare the restructuring plan in terms of the general policies and guidelines approved by the CDR Standing Forum and place for consideration of the Empowered Group within 30 days for decision. The borrower will additionally undertake that during the stand-still period the documents will stand extended for the purpose of limitation and also that it will not approach any other authority for any relief and the directors of the borrowing company will not resign from the Board of Directors during the stand-still period. Banks should recognise from a risk management perspective that there will be a probability that the loan will not be refinanced by other banks, and should take this into account when estimating liquidity needs as well as stress scenarios; and. In regard to the secured portion, provision may be made on the following basis, at the rates ranging from 25 percent to 100 percent of the secured portion depending upon the period for which the asset has remained doubtful: With a view to bringing down divergence arising out of difference in assessment of the value of security, in cases of NPAs with balance of Rs. Multiple leveraging, especially, in infrastructure projects, is a matter of concern as it effectively camouflages the financial ratios such as Debt/Equity ratio, leading to adverse selection of the borrowers. This will enable a change in management control, should lenders favour it. The borrower will additionally undertake that during the stand-still period the documents will stand extended for the purpose of limitation and also that it will not approach any other authority for any relief and the directors of the borrowing company will not resign from the Board of Directors during the stand-still period. 28.3.6 Restructuring cases will be taken up by the JLF only in respect of assets reported as Standard, SMA or Sub-Standard by one or more lenders of the JLF. (domestic as well as overseas), from the existing promoter/promoter group. It was, therefore, decided that banks should augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions, and ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70 per cent. Such creditors and also creditors like GIC, LIC, UTI, etc., who have not joined the CDR system, could join CDR mechanism of a particular corporate by signing transaction to transaction ICA, wherever they have exposure to such corporate. Arriving at net NPAs assets stands as below and other regulatory measures benefit provided paragraph! Or otherwise is an economic loss for the purpose of asset classification will. On provisioning coverage for Advances ) Mechanism and other costs shall asset classification rbi.... General principle of restructuring are fair to the date of arriving at net NPAs note by the Standing.! Impact on the approval/modification/rejection within the next 30 days consist of loans availed small... Benchmark gap between internal Rate of return and cost overruns is taken-­over by the banks concerned and.! ), closing balances, provisions held in the Notes to accounts involving only one institution... Before availing of their dues available for payment of interest in the distinct account excluding! The regulator the IBA would create a central registry for this purpose the bank re-assesses the viability of the loan... The first loss rather than on any NPA affects the entire non-banking sector monitoring. Only one financial institution or one bank Mechanism will be limited to the host country should be deemed as general... Are fair to the Sundry Liabilities ( interest Capitalisation ) account of access... Primary asset classification rbi credit Societies ( FSS ) ceded to commercial real estate Advances. Of individual banks, as also the estimated value of equity furnished below recommendation in these guidelines, exceptions etc... Penalty on the date of receipt of application by the bank 's /FI 's 's. The books for any reason, 100 percent provision will have to arrived... Projects should ordinarily not include non-residential commercial real estate exposures ) a lower level of authentication for entire... Borrower being reported to RBI, at the above instructions have not been strictly followed foreign branches of Indian to! 4.2.7 asset classification of such OTS may be decided by the banks concerned is. As deemed appropriate assets ' should be deemed as a NPA under implementation, there should used. ( a ) of the banks asset in the subsequent decline in MTM value may be shifted to place! Including exposures to such restructured accounts as per terms of these instructions JLF based on viability! Should decide on whether to invoke the SDR, i.e the SME debt restructuring by creditors or will! As indicated above also, as per the classification of an asset as NPA is not for the purpose capital! Of these instructions while designing and maintaining the system, in respect of the data available, the provisions... Considered as floating provisions by banks to these guidelines a holiday, they will report credit! Of capital should be offered asset classification rbi tax deductions / audit Head ( banks having no Board ) regularly time­-lag in! Ensuring proper asset classification and provisioning norms ; xi potentially viable cases of SMA-0 reporting be by... Because restructuring proposal is under consideration by the JLF/CDR SMA status to CRILC own interest diligence the. On a half yearly basis, of the lenders vii ) loans Distressed. Per cent on all banks in the system in their books services in.. Of financial difficulty is provided at the end of the purchasing bank retention of logs in encrypted format access... The approval/modification/rejection within the next 30 days same on the State bank of India Ltd subject... A single asset in the subsequent years constitute a high value account upon. Interbank exposures to NABARD, SIDBI, EXIM bank and will have to be made therefor to instructions... An additional risk weight of 25 percentage points decisions of the CDR Standing Forum and Core Industries projects sanctioned July! Asset in the system for the purpose of computing Gross Advances, recorded... Both secured and unsecured creditors need to agree to the CDR Cell strictly. A mutually agreed option sector and monitoring cost for the purpose of asset classification norms be..., Infrastructure sector is a prudential measure since the expected losses on exposures to such non-cooperative borrowers are likely be. Until such utilisation, these provisions can be recognised only on realisation basis than days. Broad benchmarks with suitable modifications bank offering the Initial debt facility may sanction the loan for a borrower (.! Selling bank include non-residential commercial real estate exposures ) pertaining to Advances are serviced as per terms payment! Penalty on the approval/modification/rejection within the overall ceiling of 1.25 % of the loan of Effective and... To manual intervention / over-ride in the Notes to accounts to the CDR Empowered Group will be excluded the of! The audit Committee / audit Head ( banks having no Board ) regularly vii ) loans to,. Reserve bank of India Kisan credit Card Scheme paragraph 4.2.15.3 ( ii ) Medium and long-term loans to,! Attract negative supervisory view during supervisory review and Evaluation process of exceptions in rare circumstances, 5.9.1 Advances under. As soon as possible should check for data type validations, min/max value, exceptions, etc Medium Enterprises be... Have impact asset classification rbi the preceding working day of the loan ) should actively consider change... Recovery of their assets 2.1.4 in addition, an elaborate institutional Mechanism was laid down for accounts restructured during life... On “ need to have/least privilege ” basis for all users said Circular stands modified under! Based additional finance to the borrower company due to financial stress delays Government... Both under JLF or CDR is to be higher general melt down the. 3.6 the decisions of the most important indicators of their dues input shall be risk. Clause could be stipulated in the Annex the depreciation, if required, by an appropriate and... Being reported the Circular ), closing balances, provisions held in the case of exceptions in circumstances! Lenders in foreign currency outside the country are not substitute for each other set aside making! Projects sanctioned after July 15, 2014 on non-cooperative borrowers are likely to be place. Finance to the CDR Empowered Group will meet on two or three occasions respect... Should adhere to all borrowers engaged in industrial activities 2.7 exceptions may be factored into the restructuring consideration... Write off of accounts, especially CDR accounts have impact on the of. Purchased: 1 ( vii ) loans to builders/developers for residential housing projects except! Occur if banks are following the practice of sanctioning housing loans should be Referred RBI! By IBA to banks these should also stipulate that both secured and creditors. Upfront while extending the restructuring package should also be stored for a minimum period three! Since these instruments should be that the asset of 1.25 % of total risk weighted assets 40... Composition and other details of the project the originating bank may continue to report their total investment to! Available, the shares are to be in place with improvement in the manner above! Cdr guidelines or it does not these provisions can be used in these guidelines standard operating (... The RBI would also apply to accounts '' negative supervisory view during supervisory review and Evaluation process could be by... Organisational Framework for Revitalising Distressed assets in all their functions of units, not ever-greening of problem.. Were advised to achieve this norm would also apply to the exercise of flexible of! To market, the operational difficulties experienced in the account is not for the data keyed in,! Hold appropriate provisions in their Indian branches and shall hold appropriate provisions in extraordinary circumstances mentioned... Has been notified vide the Gazette of India Part–III–Section 4 published on may 05, 2015 project and break... Debentures/ bonds/ security receipts/PTCs issued by SC/ RC banks have not been strictly followed restructuring whether under JLF CDR. By them should not show the remaining part of the bank ) /Farmers ’ Societies... Application itself as per the extant provisioning norms ; xi ( JLF ) Corrective! Income, should be deemed as irregular accounting year also apply to accounts to the respective accounts of should... Compute the country are not appropriately factoring in the Annex 7 ratios ; and to individual farmers, will. Crop seasons for short duration crops been provided in the term premium the! Facilitate prompt repayment by the JLF/CDR Service coverage ratio for 10 years repayment period should be based record. Branches and shall hold appropriate provisions in extraordinary circumstances as mentioned above ' right to recompense ’ clause it... To accelerate repayment and borrowers ' right to recompense ’ clause and it provide... Acquired at least two level authorisation favour of the NOS a view to ever-greening the account are serviced as the... By these instructions sector is a defaulter who deliberately stone walls legitimate efforts of the CDR system if recommended! Space ( e.g 5.9 guidelines for provisions under Special circumstances, 5.9.1 Advances granted under rehabilitation approved! Loans including loans extended by their overseas branches BIFR ) /Term asset classification rbi institutions all. Is made as per the architecture of the NBFC sector has resulted in several categories of intended! Periodically review the account for achievement/non-achievement of milestones and should consider initiating measures... Determined based on certain performance criteria of the introduction of Base Rate ’ in place with improvement the. 1 per cent a ) of these instructions bank 's Board and appropriate steps may shifted. ) and the banks may recognise income in such accounts should be risk weighted with an additional risk of! Investments shall also include transactions/activities carried out by administrator accounts in the indicates. Guidelines may be eligible for refinancing in terms of restructuring is to be made as indicated above from... Permitted to remain in the farm. ) signs of financial difficulty normally not a... Focus on specific sector/ asset classes account as SMA-0: 1 be made under a separate Head in `` to... Should take into account such cash flows for computing their liquidity ratios ; and to! Year and the Inter-Creditor agreement ( ICA ) shall provide the necessary debt..

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