. first, it is a prevalent misconception among the industry and borrowers that restructuring can be carried out only in cases of standard accounts. the reserve bank has clarified time and again that even the accounts classified as substandard and doubtful can be restructured, if found viable. however, the asset classification benefit of retention of standard account classification after restructuring, although it being an event of impairment, is a regulatory forbearance. such regulatory forbearance is available on certain conditions laid down by the reserve bank ’ s guidelines. but accounts can always be restructured outside the regulatory forbearance, if found viable. 13. even the accounts which are compulsorily downgraded on restructuring due to absence of regulatory forbearance can be upgraded after satisfactory performance during the specified period. industry, borrowers as well as banks approach the reserve bank for granting them the permission to restructure their accounts on account of some hardship. as the rbi guidelines on restructuring are comprehensive and applicable to all borrowers and they already provide some regulatory forbearance, such requests imply a request for further relaxations in our guidelines. such frequent tweaking with regulatory guidelines is not an ideal practice and therefore, the reserve bank generally does not agree to such requests. at times an impression is created that such refusals imply that these accounts cannot be restructured. however, the fact remains that restructuring of viable accounts is always in the domain of the banks and it is the duty of the banks to nurture a viable account even in the absence of asset classification benefit. 14. having presented some of these common misconceptions about the regulatory approach to restructuring ; let me know turn to why regulators are interested in what is, after all, a bilateral commercial decision between the borrower and the bank. the regulator ’ s interest in restructuring emerges from the close linkages between restructured accounts and non - performing advances ( npas ). let me elucidate. if the terms and conditions of loans, especially in relation to repayment are not adhered to, especially for a specified period of time, account is classified as an npa. if accounts are restructured, then too, the terms and conditions of the loans are not fulfilled. but such accounts are not always classified as npas. from an operational perspective, there can be two types of restructured accounts : the first type of accounts are those which are restructured and classified as npas ; the

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