Banks will now be able upgrade credit facilities to 'standard' for borrowers whose ownership has been changed outside the strategic debt restructuring (SDR) scheme.
It was expected the move would enhance banks' ability to change ownership in entities under stress due to operational and managerial inefficiencies despite substantial sacrifices made by lenders, RBI stated.
The central bank clarified such an exercise wouldn't enjoy exemption from the Securities and Exchange Board of India's rules to compute the equity price while converting debt into equity of the borrowing entity. This exemption is available for cases under the SDR framework.
Banks had been given relaxation from certain asset classification norms while changing the ownership of borrowing entities facing stress due to operational/ managerial inefficiencies of existing promoters, RBI said.