Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair recovery of lenders – Framework for revitalisation of distressed assets
The RBI has issued guidelines for classification of standard assets into three sub-categories, viz., SMA-0, SMA-1 and SMA2 in order to recognise the financial distress in any performing asset at an early stage, besides regulatory compliances like forming of Joint Lender’s Forum, reporting to CRICL, etc. for specified categories of Special Mention Accounts (SMA). In case if the bank does not follow the said regulatory compliances, such
accounts are subjected to accelerated provisions. These provisions are elaborately given in Paragraphs 2.232 to 2.235 of the Guidance Note.