December 17, 2013 / 11:56 AM / 4 years ago

India cbank releases discussion paper for banks' bad loans

MUMBAI, Dec 17 (Reuters) - The Reserve of India released a discussion paper on Tuesday for early recognition of financial stress and steps for debt collection.

It proposed leveraged buyouts for specialised entities for acquisition of “stressed companies” and said sector-specific companies and private equity firms may be allowed to play an active role in stressed assets market.

It also proposed improvement in current debt restructuring process and more expensive future borrowings for borrowers who do not cooperate with lenders in resolution.

Indian banks, particularly state-run lenders, are reeling under deteriorating asset quality and falling profits, prompting the central bank to take steps to improve debt recovery and early detection of stress.

The RBI has invited comments on the paper till Jan. 1, 2014. (Reporting by Swati Pandey and Sumeet Chatterjee; Editing by Anand Basu)

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