NCP chief Sharad Pawar slams new RBI guidelines for loan restructuring

Says they are going to pose more problems for some industries that create most of the jobs in the economy

Former Union agriculture minister and NCP chief Sharad Pawar has criticised the Reserve Bank of India (RBI) for arbitrarily introducing new guidelines for loan restructuring that were intended to resolve the problem of stressed loans of companies.

Pawar called some of the new provisions “reckless”.(HT FILE)

Terming some of the provisions reckless, he said that they are going to pose more problems for some industries that create most of the jobs in the economy.

On February 12, the RBI tightened norms for bad loan resolution by setting timelines for resolving large non-performing assets (NPAs), failing which, banks would have to mandatory refer them for insolvency proceedings.

“The new framework has severe deficiencies such as default is counted from Day 1, requires consent of 100% of lenders, it will be difficult for banks to write back provisions, excessive faith in the Nascent Bankruptcy Resolution Process and no provision for the transition period,” Pawar tweeted on Tuesday.

Pawar said the RBI should revise the guidelines by taking feedback as the new the framework was introduced without consulting stakeholders.