obcindia.co.in Debt Restructuring Scheme DRS : Oriental Bank of Commerce

Organization : Oriental Bank of Commerce
Facility : Debt Restructuring Scheme (DRS)

Scheme : https://www.statusin.in/uploads/20862-RevisedPolicyDRS_SME.pdf
Home Page : https://www.pnbindia.in/

Debt Restructuring Scheme :

Eligibility criteria:
** As per RBI guidelines the Debt Restructuring guidelines shall be applicable for SMEs to the following entities, which are viable or potentially viable

Related : Oriental Bank of Commerce Scheme For Financing Autos / Taxis : www.statusin.in/20857.html

** All non-corporate SMEs irrespective of the level of dues to banks.
** All corporate SMEs, which are enjoying banking facilities from a single bank, irrespective of the level of dues to the bank.
** All corporate SMEs, which have funded and non-funded outstanding up to Rs.10 crore under multiple/ consortium banking arrangement.
** Accounts involving wilful default, fraud and malfeasance will not be eligible for restructuring under these guidelines.
** Accounts classified by banks as “Loss Assets” will not be eligible for restructuring.
** In respect of BIFR cases banks should ensure completion of all formalities in seeking approval from BIFR before implementing the package.
** All corporate SMEs which have funded and non –funded outstanding of Rs.10.00 crore and above shall be restructured as per the CDR mechanism as laid down in RBI circular no.
** The same shall however be modified in the light of guidelines to be issued by RBI and when the same is received.

CASES WHICH CANNOT BE CONSIDERED UNDER SME-DRS :
** Accounts classified as “Loss Assets” will not be eligible for restructuring under this scheme.
** Cases involving frauds or diversion of funds with malafide intent will not be eligible for restructuring under this scheme.
** Accounts involving fraud and malfeasance will not be eligible for restructuring under this scheme.
** In respect of BIFR cases approval from BIFR shall be obtained before implementing the package and completion of all formalities in seeking BIFR approval shall be obtained.

The definition of willful default, will broadly cover the following :
** Deliberate non-payment of the dues despite adequate cash flow and net-worth.
** Siphoning off of funds to the detriment of the defaulting unit.
** Assets financed have either not been purchased or have been sold and proceeds have been mis-utilised.
** Misrepresentation /falsification of records.
** Disposal/removal of securities without bank’s knowledge; and.
** Fraudulent transactions by the borrower.

Bank’s Policy:
The Restructuring package should be worked out and implemented within 90 days from the date of receipt of request for restructuring from the borrower.

REJECTION OF CASES :
UNDER SME-DRS AND MAINTAINENCE OF REGISTER FOR RECORDING SANCTIONS / REJECTIONS
** Rejection of applications received under SME-DRS should be done after careful consideration and reasons for rejection should be recorded in the process note with valid reasons.
** Rejections of applications under SME-DRS should be done only after obtaining prior approval of the next higher authority. The copy of the process note giving valid reasons for rejections and views should be sent to the next higher authority for prior approval.
** If the restructuring is not found viable the bank would be free to take necessary steps for immediate recovery of dues.

A register should be maintained at the Branch wherein the following details should be recorded and made available to all inspecting agencies
** Date of receipt of application
** Date of sanction / rejection
** Reasons for rejection
** Date of disbursement

STAGES AT WHICH PROPOSALS UNDER SME-DRS CAN BE CONSIDERED :
** There would be no requirement of the account / borrower being sick, NPA or being in default for a specified period before being considered for restructuring under the SME-DRS.
** However potentially viable cases of NPAs should get priority. This approach would provide the necessary flexibility and facilitate timely intervention for debt restructuring under SME-DRS.
** The debt restructuring exercise would have to be triggered by the Bank and prescribing any milestone(s) would not be necessary.

Proposals under SME-DRS may normally be considered at various stages such as:
** before commencement of commercial production;
** after commencement of commercial production but before the asset has been classified as ‘sub-standard’;
** after commencement of commercial production and the asset has been classified as ‘sub-standard’ or ‘doubtful’.
** Any other stage other than above.
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