DMPQ: RBI has taken several steps to deal with stressed asset problems. Discuss the steps taken by the RBI. Also comment on their success.

Steps taken by RBI:

 

  • Establishment of private Asset Reconstruction Companies (ARCs)

Many ARCs have been created, but they have solved only a small portion of the problem, buying up only about 5 percent of total NPAs.

 

  • Strategic debt restructuring scheme: under this creditors could take over firms that were unable to pay and sell them to new owners.

 

  • Sustainable structuring of stressed assets: under this creditors, could take over firms with debt reduction up to 50% in order to restore their financial viability.

 

  • Asset quality review: to stream line the balance sheet to reflect the true picture.

 

  • Indradhanush scheme: capital infusion in PSB’s

 

 

Analysis of the scheme:

Success of the schemes are limited. There are several reasons for this:

  • The Asset Quality Review (AQR) was meant to force banks to recognise the true state of their balance sheets but bank keep on evergreening loan.
  • The RBI has encouraged creditors to come together in Joint Lenders Forums, where decisions can be taken by 75 percent of creditors by value and 60 percent by number. But reaching agreement in these Forums has proved difficult, because different banks have different degrees of credit exposure, capital cushions, and incentives.
  • The S4A scheme recognises that large debt reductions will be needed to restore viability in many cases. But public sector bankers are reluctant to grant write-downs, because there are no rewards for doing so.

 

Final Destination for Haryana PSC Notes and Tests, Exclusive coverage of HPSC Prelims and Mains Syllabus, Dedicated Staff and guidence for HPSC Exams HPSC Notes brings Prelims and Mains programs for HPSC Prelims and HPSC Mains Exam preparation. Various Programs initiated by HPSC Notes are as follows:- For any doubt, Just leave us a Chat or Fill us a querry––

Hope we have satisfied your need for HPSC Prelims and Mains Preparation

Kindly review us to serve even better


HPSC Mains Test Series 2020

20 Quality mock tests and GS Mains Notes

Mains Test Series and Notes

Mains Printed Notes (With COD)


HPSC Prelims Test Series 2020

24 Quality mock tests and GS Prelims Notes

Prelims Test Series and Notes

Prelims Printed Notes (With COD)

[jetpack_subscription_form title=”Subscribe to HPSC Notes” subscribe_text=”Never Miss any HPSC important update!” subscribe_button=”Sign Me Up” show_subscribers_total=”1″]

error: Content is protected !!