New Delhi: The government is planning tightening of norms than planned earlier for bad loan resolution by making applicable the current 180-day timeline for the resolution of large Non Performing Assets (above Rs 2,000 crore) to smaller ones (above Rs 100 crore) too.
The original plan was to do this gradually over a two year period. The government has been under pressure from opposition parties over the seeming rot in the banking system -- including bad loans (which the National Democratic Alliance has pointed out, largely stems from loans issued during the previous United Progressive Alliance era), and frauds.

In February, the Reserve Bank of India, the banking regulator, scrapped several debt restructuring schemes and said in a statement that in cases where the banking sector’s aggregate exposure is over Rs 2,000 crore in large accounts that have been classified NPAs, banks have to implement a resolution programme within 180 days, failing which they have to launch insolvency proceedings “singly or jointly,under the Insolvency and Bankruptcy Code 2016 (IBC) within 15 days from the expiry of the said timeline.”
RBI’s intent at the time was to crack down on both NPAs and restructured loans.
The banking system has around Rs 10 trillion of stressed assets, according to some estimates. Of this, approximately Rs 7.7 trillion is NPAs and the rest, restructured loans, where a resolution process has been launched. But stretching the threshold to “Rs 100 crore, if that number is true” seems to be a classic instance of “overkill”, a banking sector analyst said, asking not to be identified because he says he doesn’t want to be seen to be condoning “defaults”.
“The reduction of the threshold may happen earlier than expected,” an official said.