Mumbai: RBI has proposed a new route to launch poor loans for banks and NBFCs, allowing them to directly sell and sell stressed property to investors through special objective institutions established by regulated financial firms. So far, only asset reconstruction companies handled such assets. The move, declared with the April Monetary Policy, intend to comprehend the market for crisis -affected loans and reduce dependence on arcs.
A major feature is the appointment of resolution managers, which is assigned to recover the price from the underlying assets. It should be independent of the original lender. For such loans, RB-regulated institutions can act as resolution managers. For others, insolvency professional and regulated institutions can qualify. Lenders should gradually make provision for safe notes in five years. Capital requirements vary with recovery ratings, in favor of senior installments. Any exposure left after five years is to be marked again to 1.
With new dispensation, arcs may lose some of their markets. Large cases are currently going to NARCL, and the new structure will now allow lenders to bypass arcs for medium -sized and retail loans. The RBI has also made it mandatory that ARCs will have to increase its net owned fund by FY26 to Rs 300 crore, a threshold yet to get. The new structure holds a major principle of RBI rules on poor loans, which aims to prevent defaulters from getting control of their property through the back door.
