What changed
The earlier circular (January 2, 2009) required banks to receive restructuring applications by January 31, 2009 for accounts that were standard as on September 1, 2008. RBI has now extended this cut-off date to March 31, 2009, responding to bank representations about the high volume of accounts needing restructuring. The 120-day timeline to put the restructuring package in place will now run from the date of taking up the account after March 31, 2009.
What it means for you
Banks get additional two months to identify and process eligible standard accounts for restructuring without losing their standard asset classification. This is critical for lenders dealing with a surge in restructuring requests amid the 2008-09 financial stress. The relaxation applies only to accounts that were standard on September 1, 2008 and eligible under the August 27, 2008 circular. The general restructuring framework and CDR mechanism provisions remain unchanged.
What you must do
- Update internal timelines to accept restructuring applications for eligible standard accounts up to March 31, 2009.
- Ensure all such accounts were standard as on September 1, 2008 and meet the August 27, 2008 circular criteria.
- Track the 120-day implementation window from the date of taking up each account post-March 31, 2009.
- Align CDR mechanism accounts with the same extended deadline and provisions.
Who it affects
All scheduled commercial banks (excluding RRBs and LABs), Banks handling large volumes of restructuring under CDR mechanism, Borrowers with standard accounts as on September 1, 2008 seeking restructuring
Which accounts are eligible for this extended restructuring deadline?
Only accounts that were standard as on September 1, 2008 and eligible under the August 27, 2008 circular. The extension applies to restructuring applications received by March 31, 2009.
Does this change the 120-day timeline for implementing the restructuring package?
Yes, the 120-day period will now be counted from the date the account is taken up for restructuring after March 31, 2009, not from the earlier January 31 deadline.
Are CDR mechanism accounts covered under this extension?
Yes, all provisions of this circular and the related December 8, 2008 and January 2, 2009 circulars apply to accounts restructured under the CDR mechanism as well.