RBI's new circular on stressed assets may not hit lenders' provisions hard

PSBs to relook at recovery targets, say bankers

The revision in stress resolution guidelines is unlikely to have a significant impact on the provisioning and earnings of corporate lenders, as banks have already recognised a major chunk of such accounts under the Reserve Bank of India’s (RBI’s) February 12 circular. 

It sets a tight framework on deciding the course of action for big-ticket stressed assets. 

While the 30-day review period gives some breathing space, the disincentive for delays and incentives for taking a case to the bankruptcy court forces lenders, such as 

State Bank of India, Punjab National Bank, ICICI Bank, etc, to act in a time-bound manner.