The Reserve Bank of India (RBI) head office in Mumbai. Photo: Reuters
The Reserve Bank of India (RBI) head office in Mumbai. Photo: Reuters

The Reserve Bank of India has tightened and streamlined its requirements in regard to stressed assets and told banks to make weekly disclosures.

Banks have been told they must resolve defaults within 180 days – so bad loans must be identified immediately and disclosures made every Friday to the RBI credit registry.

The RBI has formulated a single code to resolve stressed accounts and withdrawn the existing resolution frameworks and also discontinued the Joint Lenders’ Forum with immediate effect, according to a report by and other outlets.

According to the RBI circular, banks have to identify stress in loan accounts and classify them as special mention accounts (SMAs). They have to report credit details to the Central Repository of Information on Large Credits on all borrower entities with an aggregate exposure of Rs 50 million (US$778,500) and above on a weekly basis.

The RBI has called upon banks to put in place policies for resolution of stressed assets. As soon as there is a default in the borrower entity’s account with any lender, all lenders — singly or jointly — shall initiate steps.

From February 23, once an account is marked as stressed in one bank, other banks will have to acknowledge that and start following a standard procedure.

The new guidelines, however, will not affect existing loan resolution cases.

After enacting its first comprehensive bankruptcy regime in 2016, India last year gave the central bank more powers to push lenders to deal with nearly $150 billion in troubled bank loans.

But the move is seen to have stymied new lending and slowed economic growth. Last year, the RBI ordered banks to force roughly 40 of the country’s biggest corporate loan defaulters into bankruptcy proceedings.

with Reuters