Sustainable Structuring Of Stressed Assets

INTRODUCTION:

The Reserve Bank of India ("RBI"), from time to time, had issued various Guidelines with the objective of stimulating the stressed assets in the economy. Such Guidelines provide framework for Strategic Debt Restructuring (SDR) Mechanism, revitalizing the distressed assets in the economy, restructuring of advances, flexible structuring of long term project loans etc. To provide further flexibility to deal with stressed assets in the Country, the RBI had introduced SDR Mechanism for the purpose of ensuring more stakes of promoters in reviving stressed accounts and providing banks an option to initiate change of ownership, in cases where borrower companies fail to meet the critical conditions and viability milestones in the loan account. The Guideline on SDR provides that banks should consider revival plan using SDR only in cases where change in ownership is likely to improve the economic value of the loan asset and the prospects of recovery of their dues.