RBI Panel for Recast of CDR Loan Norms

A Reserve Bank of India committee on Tuesday suggested aligning the restructuring norms for those advances not under corporate debt restructuring mechanism with the loans under CDR.

“The regulatory framework prescribed under CDR mechanism is very exhaustive and is conceptually sound. Therefore, it should be the basis of restructuring framework for all other advances,” RBI panel said.

Alike CDR loans, while calculating the “diminution” in the value of the loan, banks should take into account the present value of both interest and principal cash flows, RBI panel said.

Currently, the loans not under CDR are restructured on the basis of calculating only the interest cash flows, the panel said.

The panel suggested the new restructuring norms following the proposal in RBI’s annual monetary policy statement of 2006-07.

(Courtesy: Business Standard)

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