With the banks, especially public sector, reeling under a mountain of bad debt, they have sought a few relaxations from the Reserve Bank of India (RBI) in the current scheme for Sustainable Structuring of Stressed Assets (S4A) including waiver of promoters' personal guarantee, for speedy resolution of the non-performing assets (NPAs). They have also requested the regulator to allow fresh moratorium or extend repayment schedule or reduction of rate of interest under the scheme, which are not allowed in the exiting S4A guidelines.
Under the S4A scheme, the joint lender forum is required to obtain promoters personal guarantee before implementing the stress asset resolution plan. For stressed companies, the factors causing the stress are beyond the control of the promoters. Therefore, it is impractical to require furnishing of personal guarantee, especially in case of listed companies. So, the requirement of furnishing personal guarantee must be waived.
Lenders have said that the purpose of S4A is to remove the financial stress of companies for which some relaxation in terms of repayment schedule or reduction in rate of interest is needed. They also said that the RBI should allow them to grant fresh moratorium or extension of repayment schedule or reduction of rate of interest to help companies come out of stress. According to bankers, the level of sustainable debt should be based on an independent techno-economic viability (TEV) study and not be constrained by the minimum percentage of debt that will be sustainable.