RBI reverses course on restructuring of troubled loans
Decision goes against previous demands that banks cease policy of “extend and pretend”
The Reserve Bank of India has gone ahead with plans to allow banks to restructure troubled loans, reversing a key policy priority of two previous governors.
Under the new policy, banks and non-bank financial companies will be allowed to make a one-time restructuring of loans to small and medium-sized businesses without such loans being classed automatically as “non-performing”. Non-performing loans come with higher provisioning requirements and tougher scrutiny from supervisors.
Firms that
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