RBI issues clarification on S4A norms for NPAs to banks: Sources

The Reserve Bank of India (RBI) has issued a clarification with respect to norms of its Scheme for Sustainable Structuring of Stressed Assets (S4A), which allows bankers to restructure debt of companies in default.Sources have CNBC-TV18 that banks will now be allowed to waive accrued penal interest according to their own policy. This interest need not necessarily include aggregate bank exposure. Penal interest is the higher interest rate charged by banks once an account becomes a non-performing asset.These norms will be applicable to all entities excluding loans to projects that are still under implementation. In an earlier notification, RBI had said that S4A norms will be applicable on entities having Rs 500 crore plus debt. Asset restructuring companies (ARCs) backed accounts will also come under this. Earlier, accounts under ARCs for cash consideration were not included.Sources further add that banks can now accept upfront infusion from promoters to reduce debt. watch video for more..