NEWS & ADVICE : FIXED DEPOSITS
RBI lays down a uniform criterion for restructured loans
By Neelima Shankar
Apr 13, 2009
Print    Email    RSS   

Banks that are restructuring loans on the RBI's demand will now follow the standardized norms set by the central bank for calculating the depreciation in the fair value of restructured loans.

Earlier the banks were valuing the restructured loans differently in the different economic conditions as the depreciation of the value is mainly resulted due to a general rise in the level of interest rates prevalent in the system.

Accordingly banks have done higher provisioning because of the rising interest rates in the past few years. This higher level of provisioning has affected the profit margins of banks at the time when banks are already strained with the slowdown.

Considering this fact, RBI has prescribed the rules in a manner that alterations in the fair value of the loan due to the changes in the market conditions are not taken into account while estimating the deprecation of the restructured loan.

Meanwhile RBI has deferred its decisions of implementing the rules that prevent banks to deduct floating provisions made for non-performing assets from the Gross NPAs for the financial year 2009-10.

RBI had last month directed banks to include floating provisions as part of tier capital II rather than deducting them from Gross NPAs to arrive at net NPA situation for the fiscal 2008-09.

Banks were also told to accept all restructuring requests that came in before March 31st and thereafter given 120 days to restructure these loans.

 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
J&K Bank raises PLR
Recurring deposit facility by IDBI Bank
Planning to invest in a bank FD? Think again
Investment options to Save Tax under...
ICICI Bank’s recurring deposit scheme


MEXING: CaℒL Giℛℒ In Hoshiarpur 09855660911...
Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive