Financial Daily
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Thursday, August 03, 2000



Banking & Finance | Prev

RBI issues NPA settlement norms

Our Bureau

MUMBAI, Aug. 2

THE Reserve Bank of India has issued ``a simplified, non-discretionary, and non-discriminatory set of guidelines for compromise settlement of non-performing assets (NPAs) up to Rs. 5 crores'' for uniform implementation by banks, a press release issued by the Indian Banks' Association (IBA) said.

These guidelines cover NPAs relating to all sectors, including the small-scale sector. The revised guidelines cover all doubtful and loss assets (irrespective of the nature of business) as on March 31, 1997, up to Rs. 5 crores.

According to the release, advances classified as sub-standard as on March 31, 1997, and which have turned doubtful or loss assets subsequently would also be covered. Cases pending in courts, DRTs or the BIFR would also be eligible subject to consent decr ee being obtained.

Cases of wilful default or malfeasance will not be included. In respect of doubtful and loss assets as on March 31, 1997, the minimum amount payable would be 100 per cent of outstanding as on the date of transfer to protested bills or date of treatment o f account as doubtful NPA, whichever is earlier, it said.

For sub-standard assets as on March 31, 1997, subsequently treated as doubtful or loss assets, the minimum acceptable settlement amount would be 100 per cent of the outstanding balance as on the date of transfer to pretested bills or date of treatment of account as doubtful NPA plus interest from April 1, 1997 at the existing PLR of the bank till the date of final payment, the release said.

The amount of settlement arrived at should preferably be paid in one lumpsum. If not, at least 25 per cent down payment, and the balance in instalments within a period of one year together with interest at the existing PLR from the date of settlement up to the date of final payment, the release added.

Related links:
NPA recovery schemes

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