Restructure debt in 90 days: RBI

Reserve Bank of India (RBI) on Thursday said finance companies will have to implement a debt-restructuring package, under the Joint Lender's Forum and multiple banking arrangements in 90 days. Other restructuring packages should be implemented within 120 days from the date of the receipt of application by the non-banking finance companies (NBFCs).

RBI revised the rules for debt recast following a review of the framework for revitalising distressed assets in the economy and strategic debt restructuring mechanism.

The central bank said promoters of companies must bring additional funds in all cases of restructuring.

Additional funds brought by promoters should be a minimum of 20 per cent of NBFCs' sacrifice or two per cent of the restructured debt, whichever is higher.
 
The promoters' contribution should invariably be brought upfront while extending the restructuring benefits to the borrowers.

The promoter's contribution need not necessarily be brought in cash. Their contribution can be brought in the form of conversion of unsecured loans from the promoters into equity, RBI added.

NBFCs should determine a reasonable time period during which the account is likely to become viable, based on the cash flow and the techno economic viability (TEV) study.

They should be satisfied that the post-restructuring repayment period is reasonable, RBI said.