RBI has made substantial changes in the norms for dealing with stressed loans and warned banks they will be penalised for missing Non-Performing Assets (NPA) resolution timelines.

RBI, through a notification, eased the decision making process in the Joint Lenders' Forum and Corrective Action Plan under the 'Framework for Revitalising Distressed Assets in the Economy'.

The apex bank also warned that any non-adherence to these instructions and timelines specified under the Framework shall attract monetary penalties on the concerned banks.

Yesterday, the government notified an ordinance empowering the Reserve Bank to issue directions to banks to initiate insolvency resolution process in case of a default under the Insolvency and Bankruptcy Code, 2016.

Meanwhile, leading bankers have welcomed the NPA ordinance. SBI Chairperson Arundhati Bhattacharya said, it indicates government's firm commitment to find a satisfactory solution to the problem of non-performing assets. She said empowering RBI with an explicit mandate, should reorient various stakeholders for effectively resolving the bad loans problem.

ICICI Bank Chief Executive Chanda Kochhar said, the ordinance will give a kick-start to the resolution process adding that initially banks were only focussed on NPA recognition while resolution was not happening.

The bankers said, the move will help in setting a clear direction and build confidence among lenders #casansaar (NewsonAir)