RBI’s New Bad Loan Rules Credit Positive for Banks, Says Moody’s Anbarasu

The transcript discusses the RBI's Feb 12 circular, which required banks to initiate a resolution plan for defaulted loans. The Supreme Court later struck it down, leading to a new circular that is seen as credit positive. This new circular emphasizes proactive loan loss provisioning and includes non-bank financial companies (NBFCs) in its scope. The impact on NBFCs, especially those involved with large corporate borrowers, is significant as they now face similar provisioning norms as banks. The transcript also highlights liquidity issues faced by finance companies, exacerbated by past defaults, and the need for banks and NBFCs to collaborate in resolving stressed assets.

In what ways are banks expected to work together with RBI to address stressed assets?

What liquidity issues are currently affecting finance companies?