Over to banks now

New NPA resolution norms are finely balanced

The Reserve Bank of India (RBI) has adopted a carrot-and-stick approach to the resolution of stressed assets. The new norms released last Friday have empowered banks to hammer out a resolution but have also put in place enough safeguards against any intent to evergreen stressed accounts. Lenders will be subject to stringent action, including higher provisioning and monetary penalties. Resolution plans shall provide for payment not less than the liquidation value due to dissenting lenders, the RBI said in its latest framework.

The most substantive change in the new stressed asset resolution norms two months after the Supreme Court struck