Monday, September 19, 2016

RBI asks banks to lay down clear policy on stressed asset sale

Amid rising NPAs, RBI asked banks to put in place clear policies for sale of stressed assets. In order to attract a wide variety of buyers, the guidelines said the invitation for bids should preferably be publicly solicited. An open auction process, apart from attracting a larger set of borrowers, is expected to result in better price discovery. Banks should have clear policies with regard to valuation of assets proposed to be sold... However, in the case of exposures beyond Rs.50 crores, banks shall obtain two external valuation reports. Further, the discount rate used by banks in the valuation exercise should be spelt out in the policy. To enhance SC/RCs' ability to aggregate debt faster, a bank offering stressed assets for sale should offer the first right of refusal to an SC/ RC which has already acquired the highest and significant share of the asset by matching the highest bid.


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