What is scheme for sustainable structuring of stressed assets?

The S4A Scheme aims at deep financial restructuring of big debted projects by allowing lender (bank) to acquire equity of the stressed project. In this context, the scheme makes financial restructuring of large projects at the same time helping the lender’s ability to deal with such stressed assets.

What is stressed asset resolution?

As per RBI’s “Prudential Framework for Resolution of Stressed Assets”, once a borrower is reported to be in default by any of the lenders, they should undertake a prima facie review of the borrower account within 30 days from such default (“Review Period”).

What are stressed assets?

When the asset is not performing because they become doubtful and NPAs from doubtful become bad loans. Before the period of 90 days, they are calledStressed Assets. Stressed assets= NPAs + restructured loans + Written Off Assets.

What is the new loan recast scheme?

Individuals and small businesses with loans of up to Rs 25 crore who have never undergone restructuring before and who were classified as standard as on March 31, 2021, shall be eligible under the new scheme, titled resolution framework 2.0. Lenders said a fresh restructuring scheme was expected.

Which of the following statements best describes the term scheme for sustainable structuring of stressed assets?

The correct answer is It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties. A new scheme called Sustainable Structuring of Stressed Assets (S4A) to tackle bad loans of big firms was unveiled by RBI.

What is the difference between refinancing and restructuring?

Restructuring is the process of altering an ongoing loan to change the existing terms of a contract. Loan refinancing is the process of shifting an ongoing loan from one lender to another.

When were the guidelines for stressed assets issued by RBI?

Accordingly, on June 7, 2019, the RBI introduced the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 (“Prudential Framework”), providing fresh directions to lenders on the resolution of stressed assets.

What is prudential framework for resolution of stressed assets?

The Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019, dated June 7, 2019 (“Prudential Framework”) provides a principle-based resolution framework for addressing borrower defaults under a normal scenario.

What are the guidelines issued by RBI for asset classification under NPA?

For the above category of banks, an account would be classified as Non Performing Asset if the : (i) Interest and/or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan. 4 Tier II banks shall classify their loan accounts as NPA as per 90 day norm as hitherto.

What is debt restructuring scheme?

Loan restructuring is a process in which borrowers facing financial distress renegotiate and modify the terms of the loan with the lender to avoid default. It helps to maintain continuity in servicing the debt and gives borrowers a certain degree of flexibility to restore financial stability.

Who is small borrower?

The term ‘small’ in ‘small borrowers’ is a relative one and is difficult to define precisely. As per the RBI, a ‘small borrowal account’ (SBA) is defined as an account having a credit limit of up to ₹200,000 (₹25,000 till 1998 and ₹10,000 till 1983).

Which of the following statements best K describes the term scheme for sustainable structuring of stressed assets S4A )’ recently seen in the news?

Detailed Solution. The correct answer is It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties. A new scheme called Sustainable Structuring of Stressed Assets (S4A) to tackle bad loans of big firms was unveiled by RBI.