, here also, rbi did prescribe them. it started with creation of the crilc database which enabled compilation of information on level of indebtedness of various groups to the financial system. this was followed by issuance of guidelines on “ early recognition of financial distress, prompt steps for resolution and fair recovery for lenders : framework for revitalising distressed assets in the economy by rbi, which were aimed at improving the system ’ s ability to deal with corporate and financial institution distress. detailed guidelines on formation of joint lenders ’ forum ( jlf ), corrective action plan ( cap ), ‘ refinancing of project loans ’, ‘ sale of npas by banks ’ and other regulatory measures were also issued to banks for enabling prompt steps for early identification of problem cases, timely restructuring of accounts considered to be viable and recovery or sale of unviable accounts. the 5 / 25 scheme and the strategic debt restructuring scheme were also introduced with a view to enable reduction in stress levels and early resolution. surgical procedure 9. after the pre - operative procedures, rbi undertook a surgical procedure in the form of asset quality review at banks. the exercise was aimed at tracing the sources of pain and pressure points so that remedial procedure could be administered. goi must be complimented for extending total support by infusing capital / committing to infuse capital in the weaker psbs. 10. whether this surgery is successful? did it have the desired impact? i would think so. in my interaction with various players, i sense it has a very positive impact, even in tier ii and tier iii towns. the promoters have realized that the banks are going to come hard after bis central bankers ’ speeches them if they don ’ t observe credit discipline. of course, there are skeptics who say whether it was the right time to rbi to undertake this initiative especially at a stage when the economy is growing slowly. interestingly, some of these are the very same people who earlier criticized rbi for letting things drift and banks being allowed too much of forbearance. in sum, the larger fallout of the exercise is that there is a “ better credit discipline in the country ”. unsolicited advices 11. you must have experienced how many advices come your way if you suffer from an ailment. every other person has an opinion and a remedy for the same, including weird alternate therapies. situation here is not much different. even as rbi has

for additional funding for some residual investment or for working capital needs. a major impediment observed in jlf functioning is slow evolution of consensus among the consortium members and hence, the resultant action plan gets delayed invariably. the delay somehow defeats the very purpose for which the jlf mechanism is set up. there are some views about setting up an investment fund which might come in as a last mile lender. the investment fund could lend to the truncated enterprise and help it get back to profitability at which level banks could profitably dilute their equity holdings in the firm. question is who would fund this investment fund? my sense is it would have to be joint endeavor of multiple players in this arena. moreover, extending financial support would bis central bankers ’ speeches not be sufficient. such fund would also need to have capability to provide management bandwidth to the concerned projects. conclusion 15. let me conclude by saying that the global economy has been passing through a difficult phase and vulnerabilities remain. against this backdrop and that in a globally integrated economy, a general decline in the asset quality was not totally unexpected. however, the extent being witnessed could have been avoided. it is probably because neither the banks nor the corporates resorted to preventive healthcare. i am sure that everyone would emerge much wiser after enduring the pain and be circumspect in the approach and get a periodic checkup done so that they can stay healthy and live longer. 16. for the enterprises under temporary duress, we must stretch every sinew to ensure that a productive enterprise does not become terminally ill. there are suppliers - sometimes in the form of small ancillary units or msmes and then, there are workers and their families. each enterprise supports many lives. there is an entire ecosystem around a factory or company. closure of any running unit would impact the lives of scores of people and hence, i feel it ’ s a collective societal responsibility that productive enterprises don ’ t run aground. i thank edelweiss management for inviting me to this credit conclave today and wish the deliberations all success. thank you! bis central bankers ’ speeches