In wake of Indian commercial banks having far exceeded their
loss-bearing capacity, microprudential supervision for revival of
assets prior to the onset of trouble has donned a veil of urgency.
The Reserve Bank of India (RBI) has stressed that in addition to
having a spill-over effect on the market, non-performing assets
(NPAs) are detrimental to the economy on account of low
asset-performance, rapid deterioration and distress caused to
lenders and investors.
In terms of the Framework for Revitalization of Stressed Assets,
released by the RBI in February 2014, lenders are required to
report early signs of stress on an asset, based on the overdue
period of principal or interest payment. If the overdue period is
61-90 days and the aggregate exposure is over ₹1 billion
(US$15 million), lenders must form a "joint lenders'
forum" and initiate a "corrective action plan",
which includes: (i) rectification (via borrower/promoter commitment
to ensure cash flow/infusion of
