S4A Scheme

Concept: S4A Scheme

Topic: Economy

Category: Banking

Related News: Hindu, June 14

CNA mentions: 1(June 14)

S4A Scheme

The Reserve Bank has formulated the ‘Scheme for Sustainable Structuring of Stressed Assets’ (S4A) as an optional framework for the resolution of large stressed accounts. The S4A envisages determination of the sustainable debt level for a stressed borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments which are expected to provide upside to the lenders when the borrower turns around.

In order to make sure that that the entire exercise is carried out in a transparent and prudent manner, S4A envisages that the resolution plan will be prepared by credible professional agencies, while an Overseeing Committee, set up by the Indian Banks Association, in consultation with the RBI, comprising of eminent experts will independently review the processes involved in preparation of the resolution plan, under the S4A.

The concept was in the news recently. To know why it was in the news click the above link titled ‘Related News’.

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