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The Reserve Bank of India on Tuesday said it will rejig the joint lenders forum and strategic debt restructuring mechanisms to ensure that bad loan resolution mechanisms are more effective so that banks are able to clean up their balance sheets by March 2017.
The clean up is to ensure that banks get on with the business of lending and not get bogged down by legacy assets, said Governor Raghuram Rajan.
He added that: "We are giving banks various powers to deal with stressed assets and now the time has come to push more on full recognition and provisioning.
The RBI will shortly issue revised guidelines on JLF and SDR, said Deputy Governor R Gandhi.
Deputy Governor SS Mundra said the RBI has not given a list of borrowers for banks to step up provisioning.
“We have looked at banks books across industry…banks have been encouraged to take proactive and conservative approach (to bad loans recognition and provisioning),” said Mundra.
"There is no point pushing when power of banks in cleaning up stressed assets is limited."
"The time has now come for full recognition and provisioning of stressed loans."
Startups
The RBI governor said: "We want to simplify the fund raising process for startups. We are also considering access to rupee loans for startups in ECB programmes."
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