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RBI issued new guidelines for NPA recovery

RBI issued new guidelines for NPA recovery

he Reserve Bank of India (RBI) issued new guidelines on Friday to recover the stolen loans of banks and financial institutions. Under these, banks will be given 30 days to identify the default. The new guidelines have come into force with immediate effect.

Highlights

  • The RBI said that new guidelines 'Prudential Framework for Resolutions of Strong Assets' have been issued in order to provide the framework for quick identification of the trapped loan, information and the recovery of time to time bound manner.
  •  After coming under their influence, the measures already going will be invalid.
  • These include corporate debt restructuring plan, reconstruction of current long-term project loans, strategic debt restructuring plans (SDRs), changes in ownership outside SDR, Scheme for Sustainable of Stratified Assets (S4A) and Joint Lenders Forum.

New Framework

  •  With the new framework, those banks will get some relief, whose capital base is small.
  • The new framework will be applicable to commercial banks, NABARD, EXIM Bank and SIDBI, small finance banks, and important non-banking financial companies (NBFCs) who do not accept deposits.
  • Now the provision of 35 percent of the loan given to the lenders must be done. These will have to be 20 percent of the provisioning within the first 180 days of default.
  • If the lenders fail to reach any solution within 365 days, then they will have to provision of the remaining 15 percent.

Non-performing Asset:

  • When a bank gives a loan to a person, sometimes it happens that debter cannot pay a regular payment to the bank.
  • In that situation, bank sends him a notice awaring him about a legal action can be taken against him.
  • Yet the person cannot pay. Bank can take legal action against him.
  • When that person fails to pay the money / interest to the bank, the bank terms  it as a Non-Performing Asset (NPA) that means a Bad Loan.
  • There are over 1 lakh crore NPAs in India till date.
Q.1 Which bank of India provides financial help to Importers and Exporters?
A. Reserve Bank of India
B. Exim Bank
C. Central Bank of India
D. Nabard
Answer...
Ans: Exim Bank
Q.2 Which of these is a non bamking financial instituition?
A. PNB
B. IDBI
C. Muthoot
D. HDFC
Answer...
Ans: Muthoot

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