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ARTICLE · 22 SEPTEMBER 2023

Revision To The Framework For Non-Performing Investments

Stratage Law
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On September 12, 2023, the Reserve Bank of India ("RBI") notified the Master Direction – Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions)...

IndiaFinance and Banking
Stratage Law Partners
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On September 12, 2023, the Reserve Bank of India ("RBI") notified the Master Direction – Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 ("Master Direction"), pursuant to which the RBI has inter alia revised the framework regarding non-performing investments ("NPI").

The RBI mandates all commercial banks to classify their investments in debt or equity instruments of companies as NPI in cases where fixed return (including fixed dividend) on such instruments is not paid when due, and remains unpaid for more than 90 days.

Key revisions to the framework on NPI are as under:

1.Investments by banks in debt securities like bonds and debentures are to be classified as NPI in cases where the interest / installments (including maturity proceeds) are due and remain unpaid for more than 90 days.

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