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ARTICLE · 16 SEPTEMBER 2016

Legal Update – RBI

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Reserve Bank of India (the "RBI") vide its Circular No. RBI 2016-17/56 DBR.No. BP.BC.9/21.04.048/2016-17 dated September 1, 2016 on "Guidelines on Sale of Stressed Assets by Banks".

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Reserve Bank of India (the "RBI") vide its Circular No. RBI 2016-17/56 DBR.No. BP.BC.9/21.04.048/2016-17 dated September 1, 2016 on "Guidelines on Sale of Stressed Assets by Banks" (the "Circular") amended the existing guidelines relating to sale of non- performing assets ("NPAs") by banks to securitization companies ("SCs")/ reconstruction companies ("RCs") notified vide RBI's circular dated February 26, 2014 (the "Earlier Circular") and issued revised framework governing sale of NPAs by banks to SCs/RCs/non-banking financial companies (NBFCs)/financial institutions ("FIs")/etc.

The salient features of the revised Circular are as follows:

  1. At least once a year (preferably at the beginning of the year) banks with the approval of its board are required to identify the stressed assets of a specified value, which could be determined as NPAs as per the banks policy (including special mention account), and need to be offered for sale to other banks/

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