RBI to widen scope of stressed asset resolution framework, permit loss guarantee norm in digital lending

The Reserve Bank of India (RBI) has proposed to enhance the scope of the stressed asset resolution framework for all regulated entities. It has also decided to introduce default loss guarantee arrangements in digital lending. This is expected to facilitate the development of the digital lending ecosystem and increase credit penetration in the economy. The Prudential Framework for Resolution of Stressed Assets, announced in June 2019, will now apply to all regulated entities including cooperative banks. Further, RBI has proposed to rationalise the existing prudential norms regarding the restructuring of borrower accounts affected by natural calamities.