Lok Sabha Question No. 3522 (UNSTARRED), answered on 2019-07-15
Subject: Resolution of Stressed Assets
Ministry: FINANCE
Asked by: Shrirang Appa Barne, Pritam Gopinath Munde, Girish Bhalchandra Bapat

## GOVERNMENT  OF INDIA MINISTRY OF  FINANCE

ANSWERED  ON-15.07.2019

## LOK SABHA UNSTARRED QUESTION NO-3522

## RESOLUTION OF STRESSED ASSETS

3522.  SHRI SRIRANGA  APPA  BARNE DR. PRITAM  GOPINATHRAO  MUNDE SHRI GIRISH BHALCHANDRA BAPAT

## Will  the Minister  of FINANCE  be pleased to state:

- (b) whether the Indian Bank  Association has prepared a draft inter-creditor agreement  to resolve  stressed loans,  particularly those in the power  sector;
- (a)  whether   the  Reserve   Bank of  India  has  issued  a  new   circular   for  resolution   of stressed assets, if so, the details  and the salient  features  thereof;
- (c) if so, whether  the Union  Government  has studied  the aforesaid  proposal;
- (e) the steps taken  by  the Union  Government  to help  the revival  of stalled  projects?
- (d) if so, the details  and the outcome  thereof;  and

## ANSWER

- (a)  On  12.2.2018, Reserve   Bank of  India  (RBI)  issued  a  circular   on  Resolution   of Stressed Assets -  Revised  Framework.  RBI has informed  that  Supreme  Court, vide its  order   dated  2.4.2019,   held   the  said  circular   as non-est, necessitating   issue  of  a revised   circular   for  expeditious   and  effective   resolution   of  stressed  assets.  RBI  has further informed that against this background, RBI  on  7.6.2019  has issued 'Prudential   Framework   for  Resolution   of  Stressed  Assets'  for  early   resolution   of stressed assets in a transparent  and time-bound  manner,  giving  complete  discretion  to lenders  with  regard  to design and implementation of resolution  plans,  while  providing for disincentives  in the form of additional  provisioning  for delay  in implementation of resolution  plan  or initiation of insolvency  proceedings,  and making  mandatory  the signing  of an inter-creditor agreement,   providing  for majority decision-making  by  all lenders.

## THE MINISTER OF  STATE  IN THE  MINISTRY OF  FINANCE (SHRI  ANURAG  SINGH  THAKUR )

- (b)  to  (d)  As  per  inputs   received   from  Indian   Banks'   Association   (IBA),  the Prudential  Framework  issued by  RBI vide the circular  dated 7.6.2019  has made signing of  inter-creditor agreement   mandatory   before  working   out  the  resolution   proposal for a particular   stressed  account   and,   in  this   connection,   IBA  has  drafted   an  intercreditor  agreement  and circulated  the same among  its member  banks  to facilitate  the resolution   process.   IBA  has  further   apprised   that   this   draft   agreement   is  not  with reference  to any  particular  sector,  including  the power  sector.
- (e)  A  number   of  steps  have  been  taken   by   the  Government   to  help   revive   stalled projects.   A  project   monitoring   group   has  been  set  up  and  is  working   as  an institutional mechanism   to  resolve   a  variety   of  issues,  including   fast-tracking   of approvals.  Till  1.1.2019,  more  than  3,191 issues raised in the PMG portal  pertaining

to 725 projects  with  anticipated  investment  of Rs. 29.88 lakh  crore  had been resolved, and 513 inter-ministerial meetings  and 247 meetings  with  Chief  Secretaries  of States had  been  held  for  resolution   of  related   issues/clearances.   Further,   inter-ministerial groups were  constituted  by  the nodal  ministries  concerned  for the shipping,  textile, power,   telecommunications, renewable   energy   and  MSMEs  sectors  to  examine systemic  issues affecting  viability and repayment  capacity  of the sectors.

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