The project’s debt obligations grow, the promoter loses further interest, and the project goes into further losses. A number of good banks in our system have taken the necessary action to recognize and resolve stressed loans in a timely fashion. But some others need to take more proactive action.
Over the last few quarters, the Reserve Bank has expanded the tools banks have to recognize and deal with stressed loans. It is now working with the Government and banks to ensure that the stressed assets are dealt with on a proactive basis, and that bank balance sheets both reflect a true and fair picture, and are adequately provisioned.