Financial Daily from THE HINDU group of publications
Saturday, May 07, 2005

Port Info

Group Sites

Home Page - Corporate
Money & Banking - Financial Policy
Corporate - Restructuring

RBI plans to amend norms to widen corporate debt recast scope

Our Bureau

Mumbai , May 6

THE Reserve Bank of India proposes to widen the scope of Corporate Debt Restructuring (CDR) and make it more efficient.

Under the changes proposed today by the RBI to the existing guidelines, the CDR scheme will be extended to corporates on whom banks and financial institutions have an outstanding exposure of Rs 10 crore as against Rs 20 crore currently. This could bring a larger number of sick units under the ambit of CDR. A corporate coming under the scheme would require the support of 60 per cent of creditors by number in addition to the support of 75 per cent of creditors by value.

This is being done with a view to make the decision-making process more equitable, the RBI said.

This is expected to give smaller lenders a say in the debt restructuring exercise. Until now, larger lenders have been enjoying greater influence in such exercises.

To improve the efficiency of the CDR scheme, it is proposed to link the restoration of asset classification prevailing on the date of reference to CDR cell to implementation of package within three months from the date of approval of the package. This, explained a banker, means that if a CDR scheme is not implemented within three months of its date of approval, the advantages of classification of the assets would not be available to the borrower.

The RBI has also proposed one-time settlement as a part of the CDR scheme to make the exit option more flexible. This has fetched a positive response from bankers.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Airbus remarks not to hit IA order for 43 aircraft'

RBI plans to amend norms to widen corporate debt recast scope
Maruti Q4 net profit zooms 65 pc
Dr Reddy's posts Rs 51.9-cr net loss in fourth quarter
Technology, oil stocks lead rally
Khattar re-appointed MD for 3 more years

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line