RBI circular for Resolution of Stressed Assets will be a relief to businesses facing temporary financial issues

Mr. Mustafa Nadeem, CEO, Epic Research

This is a welcome step since there was a lag between the noting the default and then having a resolution to it. Earlier it was mandated to identify it on Day 1 which was actually a losing situation for the borrower. This was actually creating a stressful situation for the lender and the borrower. This new 30 Day window will now actually put a cushion for the borrower. Secondly, the powers that have been now given to lender brings a lot of clarity on the table. Since it will now be able to identify the bad loans, study the books and make a concrete resolution for the same. We believe it is a win-win situation for both - The lender and the borrower as it brings logically much-needed clarity. Definitely it has a positive impact on the NBFC sectors. There were many policies that were in place related to the framework. Firstly Incentivising the earlier resolution will help the banks. Secondly, it will completely make the other entire framework as CDR, SDR, etc obsolete. Hence a thorough and concrete policy structure under "Prudential Framework for Resolution of Stressed assets". Its financial markets. And, everyone loves the clarity in the framework and process. It should have a positive impact we believe in the medium to long term.

Source : Equity Bulls

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