Page 32 - Banking Finance MAY 2017

COVER STORY

The Enforcement of

Security Interest &

Recovery of Debts

Laws & Miscellaneous

Provisions

(Amendment)

Bill, 2016

Legal Reforms to resolve the Bad Debt RBI

The Indian banking system has undergone significant trans- 1. Strategic Debt Restructuring (SDR) : Will allow lending
formation following financial sector reforms. It is adopting banks to to convert loans into equity if a borrower fails
international best practices with a vision to strengthen the to adhere to set deadlines
banking sector. Several prudential and provisioning norms 2. Revamped the 5/25 scheme: Allows the banks to ex-
have been introduced, and these are pressurizing banks to tend the re-payment schedule of loans to 25 years, with
improve efficiency and trim down NPAs to improve the fi- an option to refinance them at the end of 5 years --
nancial health in the banking system. Will enable banks to mitigate "asset liability manage-
ment" risks in funding long gestation projects
In the face of rising NPAs in banking sector, various mitiga-
3. BASEL III norms conformance: Bank to mandatorily
tory steps have been initiated in the recent year by RBI and
comply with all the capital provision and risk manage-
Government. Some of the major initiatives can be high-
ment norms within the stipulated time frame
lighted as under.
4. Joint Lenders' Forum (JLF) : Borrowers and lenders have
to reach a conclusion for a corrective action. After the cor-
About the author rective action, all lenders under JLF must collectively hold

51% or more of the equity shares issued by the company
B B Lenka Government
Chief Manager
Union Bank of India Staff College 1. Recapitalisation:
Bangalore -- Has announced a recapitalisation package (of Rs.
80,000 crore for PSBs)

32 | 2017 | MAY | BANKING FINANCE

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