RBI on stressed assets

Prelims level : Economy / Mains: Paper – III Indian Economy Mains level :
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  • The Reserve Bank of India (RBI) has started scrutiny of 200 large accounts to assess level of stress and provisioning done against them by respective banks.


  • RBI is examining as to whether banks have followed prudential norms in respect of these stressed assets. This exercise comes at a time when gross NPAs in the banking system has risen to around ₹10.3 trillion.
  • It is also assessing classification, provisioning and debt recast in respect of those loans.
  • This is a part of regular annual inspection of book of the banks that the central bank undertakes each year after the closure of the financial year.
  • The government has empowered the RBI to chalk out plans for addressing the bad loans problem, with a focus on large stressed accounts that have been classified partly or wholly as non-performing from amongst the top 500 exposures in the banking system.


  • It is a part of effort to contain rising non-performing assets.
  • Asset classification practices were not as per the set standards and several banks resorted to ever-greening of accounts.
  • Banks were postponing bad-loan classification while depicting accounts as performing.
  • For early identification to tackle stressed loans, which gave them a jumpstart, especially in large and complex cases of corporate debt.


  • A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
  • The NPA story is not new in India and several steps have been taken by the government on legal, financial and policy level reforms. Taking note of the existing stressed assets and NPA situation, the RBI introduced a host of schemes and frameworks with the aim of curtailing the growing NPAs. These are tabled as under:
    1. Joint Lenders‘Forum and Plan
    2. Strategic Debt Restructuring (SDR)
    3. Insolvency and Bankruptcy Code, 2016
    4. Scheme for Sustainable Structuring of Stressed Assets (S4A)
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