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Restructured Loan
A restructured account is one where the bank, for economic or legal reasons relating to the
borrower's financial difficulty, grants to the borrower concessions that the bank would not otherwise
consider. Restructuring would normally involve modification of terms of the advances/securities,
which would generally include, among others, alteration of repayment period/repayable amount/ the
amount of installments/rate of interest (due to reasons other than competitive reasons). Thus, any
change in repayment schedule of a loan will render it as restructured account.

Repeatedly Restructured Accounts

When a bank restructures an account a second (or more) time(s), the account will be considered as
a 'repeatedly restructured account'. However, if the second restructuring takes place after the period
up to which the concessions were extended under the terms of the first restructuring, that account
shall not be reckoned as a 'repeatedly restructured account'

Specified Period
Specified Period means a period of one year from the commencement of the first payment of
interest or principal, whichever is later, on the credit facility with longest period of moratorium under
the terms of restructuring package.

Satisfactory Performance
Satisfactory performance during the specified period means adherence to the following
conditions during that period.

Non-Agricultural Cash Credit Accounts

In the case of non-agricultural cash credit accounts, the account should not be out of order
any time during the specified period, for a duration of more than 90 days. In addition, there
should not be any overdues at the end of the specified period.

Non-Agricultural Term Loan Accounts

In the case of non-agricultural term loan accounts, no payment should remain overdue for a
period of more than 90 days. In addition there should not be any overdues at the end of the
specified period.

All Agricultural Accounts

In the case of agricultural accounts, at the end of the specified period the account should be

NPA Account
A non-performing asset (NPA) is a loan or an advance where;
(i) interest and/ or installment of principal remain overdue for a period of more than 90
days in respect of a term loan,
(ii) the account remains ‘out of order’ as indicated at (*) below, in respect of an
Overdraft/Cash Credit (OD/CC),
(iii) the bill remains overdue for a period of more than 90 days in the case of bills
purchased and discounted,
(iv) the instalment of principal or interest thereon remains overdue for two crop seasons for
short duration crops,
(v) the instalment of principal or interest thereon remains overdue for one crop season for
long duration crops,
(vi) the amount of liquidity facility remains outstanding for more than 90 days, in respect of a
securitization transaction undertaken in terms of guidelines on securitization dated February 1,
(vii) in respect of derivative transactions, the overdue receivables representing positive
mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from
the specified due date for payment.
(*) An account should be treated as ‘out of order’ if the outstanding balance remains continuously in
excess of the sanctioned limit/drawing power for 90 days. In cases where the outstanding balance
in the principal operating account is less than the sanctioned limit/drawing power, but there are no
credits continuously for 90 days as on the date of balance sheet or credits are not enough to cover
the interest debited during the same period, these accounts should be treated as ‘out of order’.

As soon as an account is reported by any of the lenders to CRILC as SMA-2, they should
mandatorily form a committee to be called Joint Lenders Forum (JLF) if aggregate exposure (Fund
based and non-fund based together) of lenders in that account is Rs.1000 million and above.
Lenders also have the option of forming a JLF even when the AE in an account is less Rs.1000
million and/or when the account is reported as SMA-0 or SMA-1. (SMA-2 is where principal and
interest overdue between 61-90 days). If any imminent stress is substantiated by borrower and
requests formation of JLF, the account should be, reported as SMA-0, in CRILC and lenders should
form JLF if AE is Rs.1000 million and above

Corrective Action Plan: JLF should explore possibility of borrowers setting right the
irregularities / weaknesses in the account, various options available to resolve the stress in
the account and arrive at an early and feasible resolution to preserve the economic value of
the underlying assets as well as lenders’ loans. The options under CAP generally includes:
Rectification/ Restructuring/ Recovery.

Timelines are as follows for a case of Restructuring (Non-CDR) with AE less than 500Cr.
No. of days Cumulative days Activity
0 0 Reporting to CRILC as SMA 2
15 15 Convening of JLF
15 30 Convening of JLF( by second largest lender in case
lead/largest lender fails to do so in first 15 days )
- 45 CAP option finalization ( to be recorded in JLF
30 75 Detailed CAP finalization/signing off JLF agreement for
30 105 Finalization of detailed R/s Package
15 120 Approval & Conveying to lender
90 210 Overall time period for Approval & implementation of R/s
package. Pledge of shareholding. Execution of
Personal/Corporate Guarantee.
The timelines for Non-CDR accounts above Rs.500 cr and CDR accounts are longer due to
timelines allowed for Independent Evaluation Committee (for AE > Rs.500 cr) and for CDR-EG
sanctions respectively.

Forensic Audit: Forensic Audit is an examination and evaluation of a firm's or individual's financial
information for use as evidence in court. A forensic audit can be conducted in order to prosecute a
party for fraud, embezzlement or other financial claims.


The most likely manner in which restructuring is implemented has been enumerated as
MORATORIUM PERIOD - Moratorium period for payment of interest and principal
repayment or both. This gives the company crucial time period to get back to its feet.
TIME PERIOD - Extension for time period for payment of the loan.
INTEREST RATE - Reduction of the interest rate.
DEBT-EQUITY SWAP - Conversion of debt into equity either wholly or partly.
INTRODUCTION OF CAPITAL - Infusion of capital from the promoters which is then
backed by further loans by financial companies so that the operations of the company can
be brought back to its ideal state.