Debt Restructuring To Elongate Asset Quality Of Banks In India

Abstract

Banks play a vital role in Indian financial system. In order to sort out the financial problems of banks in India, many policies were framed by RBI to improve the asset quality of banks. Still our public sector banks face the problem of NPA. Debt rebuilding is a procedure that permits a private or public organization, Bank or a self-overseeing unit confronting income issues and budgetary trouble to lessen and renegotiate its off-base obligations to improve or re-establish liquidity with the goal that it can precede with its activities. Debt restructuring is a procedure utilized by organizations confronting income issues or money related misery to maintain a strategic distance from the danger of default. It very well may be completed by diminishing the financing costs on credits or by broadening the instalment term. It can likewise incorporate an obligation for value trade which implies that organization's loan bosses may consent to drop a few or the entirety of the obligation in return for value in the organization. It can likewise include a bond restructuring where the organization may haggle to discount certain part of intrigue or capital. Rebuilding obligation can be a success win for the two elements as the organization maintains a strategic distance from the moneylenders normally get more than what they would through a liquidation continuing.