RBI says there is no change of stance on February 12 circular

  1. The Reserve Bank of India has clarified that there is no change in its stand with regard to February 12 circular on stressed assets recognition and resolution.
  2. In February 2018,RBI had put out a circular on classification of non-performing assets that required banks to (a)stipulates a one-day default rule on term loans.A borrower missing repayment even for a day will be treated as a defaulter and (b)refer any account with a loan of more than Rs 2000 crore to bankruptcy court if it is not resolved within 180 days of a default.
  3. The decision had caused panic for many companies,in particular those in the power sector.Power companies had said that the circular would push even power assets that were close to achieving loan restructuring in to insolvency.
  4. In September 2018,Supreme Court had stayed RBI February 12 circular for power,sugar and shipping companies until ruling in the matter.
  5. A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.