RBI Launched Scheme for Sustainable Structuring of Stressed Assets [ Current Affairs ]

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The Reserve Bank of India (RBI) has launched the guidelines which are named as Scheme for Sustainable Structuring of Stressed Assets (S4A). The S4A was formed by RBI as an optional framework for the resolution of large stressed accounts.

The main aim of these guidelines are:

  1. Strengthen the lenders’ capability to deal with worried assets
  2. Put real assets back on track of objects facing genuine difficulties by along with an avenue for reworking financial structure.

Key Facts

  • The S4A envisages purpose of sustainable debt level of a stressed in receivership and bifurcate exceptional debt into supportable debt and equity/quasi-equity instruments.
  • The supportable debt and equity/quasi-equity instruments are predictable to offer upside to the investors when the borrower turns around.
  • Credible professional agencies will make the determination plan to make sure that entire implementation is permitted in a prudent and transparent manner.
  • Along with this the Indian Banks Association (IBA) an Overseeing Committee comprising of eminent experts will be also set up in consultation with the RBI.
  • The committee will individually review the developments that involved in preparation of the resolution plan under the S4A.

About RBI

  • RBI stands for Reserve Bank of India.
  • It is central banking organization in India.
  • It controls the financial policy of the Indian rupee.
  • It was started on 1st April 1935 during the British Rule. It was nationalized on 1st January 1949.
  • Its four local headquarters are at Mumbai, Kolkata, Chennai and New Delhi.
  • It is a leading member of the Alliance for Financial Inclusion.

- Published on: June 15, 2016