RBI proposes comprehensive framework for sale of loans

The Reserve Bank yesterday proposed a comprehensive framework for sale of loan exposures, which could be standard, sub-standard or non-performing assets (NPAs), as part of the overall exercise to deepen the market for lending.

Loan sales may be resorted to by lenders for any reasons ranging from strategic sales to rebalance their exposures or as a means to achieve resolution of stressed assets by extinguishing the exposures.

Presently, the guidelines for sale of loan exposures, both standard as well as stressed exposures, are spread



across various circulars of the RBI.

The apex bank said while issuing the comprehensive draft framework for sale of loan exposure that a dynamic secondary market for bank loans will also ensure proper discovery of credit risk pricing associated with each exposure and will be useful as a leading indicator for impending stress, if any, provided that the volumes are sufficiently large.

It said that the stakeholders can send their comments on the draft framework to the RBI by June 30.