- RBI plays a crucial role through its supervisory framework.
- Regulatory Measures:
- Strict Supervision: Post-2013, RBI’s strict supervision surfaced NPAs.
- PCA Framework: Imposes restrictions on banks based on capital, asset quality, and leverage.
- RBI Circular (June 2019): Mandated resolution strategy within 30 days of default.
- Inter-Creditor Agreement (ICA): Required for resolution plans.
- Additional Provisioning: Imposed penalties for delayed resolution plans.
- Amendments to Banking Regulation Act (2017): Authorized RBI to direct insolvency process.
- Supervisory Action Framework (SAF): Introduced for Urban Cooperative Banks.
- PCA for NBFCs: Extended PCA framework to NBFCs.