RBI norms for stressed assets - S4A
S4A Scheme
- Under this, banks can convert a portion of loans they are owned into equity.
- The idea is that if the company does well in the years to come, banks should benefit.
- This lowers the overall debt burden.
- Terms for remaining loan amount,(sustainable debt) can't be changed.
RBI has hinted that loan should be structured in a way that it accelerates repayment if cos make
unexpected gains. The formula for assessing sustainable debt -- cash flow available from the
current or immediate level of operations. The formula for assessing sustainable debt -- cash
flow available from the current or immediate level of operations.
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