Several new regulatory guidelines soon

Through the next two months, the Reserve Bank of India (RBI) plans to announce regulatory guidelines pertaining to declaring borrowers 'non-cooperative'; liquidity coverage ratio (LCR); changes in the regulatory framework for non-banking financial companies (NBFCs); and setting up small and payments banks.

Bankers said the guidelines on non-cooperative borrowers, which the central bank indicated it would announce by the end of October, would help lenders find quick resolutions to recover stressed loans. "I think this is somewhat of a war the Reserve Bank is undertaking. It is another step towards empowering banks and ensuring we get a quick resolution of stressed assets," said Arundhati Bhattacharya, chairperson of State Bank of India.

In the recent past, banks have found it difficult to recover dues from a few large corporate borrowers. Many companies have moved court against lenders, stalling the recovery process.

"The guidelines on non-cooperative borrowers will be a good development. I see it not only as a way to empower banks but also to empower the legal system to take action (against defaulters)," said Chanda Kochhar, managing director and chief executive of ICICI Bank.

 

On Tuesday, RBI raised the component of government bonds held by banks and qualifying as high-quality liquid assets (HQLA) by five per cent, to help lenders meet Basel-III liquidity norms. In June, the central bank had issued norms on LCR, allowing banks to reckon government securities as level-I HQLA, under LCR.

"On LCR, I think the Reserve Bank has given us a lot of relief and a lot of comfort," Bhattacharya said.

By the end of November, RBI plans to release the final guidelines on licensing small and payments banks. The draft norms on setting up these banks were issued on July 17.

RBI also plans to introduce changes in the regulatory framework for NBFCs within a month, covering prudential regulations on core capital, asset classification and provisioning norms, regulation on deposit acceptance, corporate governance and consumer protection measures.

A discussion paper on large exposures and convergence of exposure limits in India with those of the Basel committee on banking supervision will be released by the end of November.