Professor - Emeritus, NIBM (National Institute of Bank Management), Pune, Email: kaveri@nibmindia.org
Reserve Bank of India introduced Strategic Debt Restructuring (SDR) allowing banks to convert theirdebt into equity to acquire management control of defaulting companies and find a new buyer/promoter to divest equity holding within 18 months. But, for resolution of large borrowable accounts, it requires co-ordinated deep financial restructuring which calls for a substantial write-down of debt and/or making large provisions towards bank sacrifice. Hence, banks made a representation to RBI for allowing more time to write down the debt and make the required provisions in cases of resolution of large NPAaccounts. Appreciating their problems, the RBI decided to facilitate the resolution of large accounts by bringing out a Scheme for Sustainable Structuring of Stressed Assets (s4a) in June 2016. This has lot of potential to strengthen NPA resolution plan and, therefore, it is necessary for bankers and finance professionals to develop a good understanding of the scheme. This article discusses certain details of s4a such as its rationale, principles underlying, prudential guidelines, implementation and makes an overall assessment.
