- These guidelines are aimed at regulated entities (REs) participating in DRS and address concerns around credit discipline and moral hazard.
- Key points include:
- Assessment and Reporting: REs must assess their involvement in DRS according to their Board-approved policies and report any sacrifices made as compromise settlements.
- Prudent Management: REs should manage their outstanding dues prudently and communicate with borrowers about the terms of the schemes.
- Last Resort: DRS should be treated as a last resort and implemented with proper consultation and a clear framework to avoid financial instability.
- Model Operating Procedure (MOP): The RBI has provided a MOP for governments to follow, which includes engaging with bank committees, designing the scheme carefully, and ensuring that lending institutions are not burdened with unmanageable liabilities.
Question:
1 According to the guidelines, what must regulated entities (REs) do under Assessment and Reporting?
- A) Increase their investment in government bonds
- B) Assess their involvement in DRS according to Board-approved policies
- C) Reduce their interest rates on loans
- D) Expand their loan portfolios