Thursday, January 15, 2009

RBI LIBERALISES NPA NORMS

Further liberalising the prudential norms for the treatment of non-performing assets in the context of ongoing slowdown in the Indian economy, the Reserve Bank of India said all accounts which were standard accounts on September 1, 2008 would be treated as standard accounts on restructuring provided the restructuring is taken up on or before January 31, 2009 and the restructuring package is put in place within a period of 120 days from the date of taking up the restructuring package. The period for implementing the restructuring package has also been extended from 90 days to 120 days in respect of those accounts. The special regulatory treatment will also be available to ' standard' and
'sub-standard accounts'. These provisions would be in addition to the usual provisions as per
the current regulation. Certain modifications are necessary as the spillover effects of the global downturn had started affecting the Indian economy particularly from September 2008 creating stress
for the otherwise viable units, said RBI.

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