Business & Investment

RBI allows banks to sell fraudulent loans to asset restructuring companies

According to the guidelines, lenders should implement a comprehensive board-approved policy on the transfer and acquisition of all loan exposures.

Reserve Bank of India (RBIOn Friday, the bank was able to sell fraudulent loan exposures to the Asset Reconstruction Company (ARC). The bank will transfer loan exposures classified as fraud to ARC as of the date of transfer, subject to continued reporting, oversight, filing complaints with law enforcement agencies, and the bank’s liability for procedures related to such complaints. You will be able to transfer it. It will also be transferred to ARC.

“However, the transfer of such loan exposures to ARC does not exempt the transferor from modifying the accountability of staff required under existing instructions regarding fraud,” RBI said. Said in the direction of the master regarding the relocation of.

According to the guidelines, lenders should implement a comprehensive board-approved policy on the transfer and acquisition of all loan exposures. These guidelines must establish minimum quantitative and qualitative criteria related to due diligence, assessment, data capture, storage, management of IT systems, risk management, and regular board-level monitoring. Must be.

The board-approved policy of all lenders regarding the transfer or acquisition of stressed loans is the transfer criteria and procedures, the valuation methods to be followed, and the delegation of authority to various functions for making decisions regarding the transfer of loans. , Shall cover the purpose of acquisition. The highlighted asset and the risk premium applied.

When negotiating bilaterally, if the total exposure of the lender to the relevant borrower is more than Rs 10 billion, a Swiss Challenge auction must be held after the negotiation. In all other cases, bilateral negotiations shall follow the price discovery and value maximization approach adopted by the transferor as part of the board-approved policy, RBI said.

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RBI allows banks to sell fraudulent loans to asset restructuring companies

https://www.financialexpress.com/industry/banking-finance/rbi-allows-banks-to-sell-fraud-loans-to-asset-reconstruction-companies/2337273/ RBI allows banks to sell fraudulent loans to asset restructuring companies

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