3. Strategic debt restructuring (SDR) is one of the steps taken by RBI to control the NPA problem. Consider the following statements about it:
1.Under SDR, banks get the right to convert the full or part of their loans into equity shares.
2. SDR initiative can be taken by the particular bank.
3. SDR initiative can be taken if the account of a borrower is classified as Special Mention Account.
Which of the above statement(s) is/are correct?
So far the RBI has taken several steps to tackle NPAs and one of them is the Strategic Debt Restructuring (SDR) Scheme. Under SDR, loaner banks get the right to convert the full or part of their loans into equity shares in the loan taken company.
The SDR an initiative can be taken by the group of banks or JLF that have given loans to the particular defaulted entity. The Joint Lender Forum (JLF) is a committee comprised of the entire bankers who have given loans to a potentially stressed or stressed borrower. At present, banks can form a JLF if the account by a borrower is classified as Special Mention Account.