The Reserve Bank of India (RBI) relaxed guidelines for lenders restructuring large stressed loans, in a move that could allow banks to more effectively manage bad loans. Under a new 'Scheme for Sustainable Structuring of Stressed Assets' (S4A), RBI allowed banks to take equity in debt laden firms permitting them to split total loans of struggling companies into sustainable and unsustainable
based on the cash flows of the projects.
The latest guidelines are aimed at helping some troubled borrowers restructure and turn around quickly, by easing the interest burden on them, and in turn also speed up the asset recovery process for banks.
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