Sunday, February 08, 2015

In the recent credit policy of Reserve Bank of India (RBI), some revolutionary steps were announced to give bankers power over their defaulting borrowers. 

The RBI said that the loans given to stressed companies won't be marked as NPLs and they will be allowed two years of delay in the commencement of their projects provided a new management replaces the non performing old one. The RBI basically said that if the date of commencement of a stalled project is pushed back by two years because it is being taken over by a new promoter, then banks won't have to mark the loan as substandard. Under current rules if a project doesn't start on time, it has to be marked down as bad loan. 

This a great step in the right direction according to many bankers, as it might ease their jobs of finding new entities who could be interested in these stressed assets. 

Moreover, the RBI is also looking to waive pricing restrictions when banks convert loans given to stressed companies into equity.

All these makes the Indian Banking Sector (especially the PSU space), the most happening one. 
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