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The Reserve Bank will allow banks to extend finance to ‘specialised’ entities put together for acquisition of troubled companies. However, the lenders should ensure that these entities are adequately capitalised, the RBI said in its discussion paper on resolution of NPAs.
Alternatively (or additionally), a specialised institution may be created with equity/quasi-equity participation of ‘specialised entities’ or international institutions with the Government of India holding a part of the stake. This institution may participate in restructuring of borrowal accounts along with banks and other lenders. Government may take a view on this matter.
The Reserve Bank will withdraw the minimum holding period for any initial loan sale. However, the bank purchasing the NPA will have to hold the asset in its books for at least one year before selling the asset.
In terms of extant instructions, an NPA in the books of a bank is eligible for sale to other banks only if it has remained as NPA for at least two years in the books of the selling bank.
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