The Reserve Bank of India (RBI) has proposed new norms for bad loans of financial institutions saying that their assets would be classified as "doubtful" if it remained in the sub-standard category for one year with effect from 31 March 2005.
The step announced in the busy season for monetary and credit policy, is aimed at moving towards adoption of international best practices.
RBI said financial institutions were permitted to phase out the consequent additional provisioning over a four year period.
In an apparent tightening of its grip over development finance institutions and large non-banking finance companies, RBI has mooted supervision over them.
The need for supervision came from of suggestions by its Working Group, which recommended RBI should continue to supervise NABARD (National Bank for Agriculture and Rural Development), SIDBI (Small Industries Development Bank), NHB (National Housing Bank) and EXIM Bank.
