Scheme for Sustainable Structuring of Stressed Assets

Scheme for Sustainable Structuring of Stressed Assets (S4A):
  • Launched by RBI
  • Aims to help resolve the corporate debt problem and strengthen the lenders’ ability to deal with stressed assets.
  • Under this scheme, a company’s debt is bifurcated into two parts sustainable and unsustainable based on the cash flows of the company’s project.
  • The sustainable debt cannot be less than 50% of existing debt and will have to be serviced over the same terms as that of existing facilities.
  • The unsustainable debt can be converted into equity, Optionally Convertible Debentures or Redeemable Optionally Convertible Preference Share with clearly spelt out terms.
  • Banks can sell this stake or equity to a new owner who will have the advantage of getting to run the business with a more manageable debt.
  • Banks or lenders will formulate the resolution plan and implement the same along with necessary internal approvals.
  • RBI mandated advisory body called Overseeing Committee (OC) will be constituted, which will review the resolution plans submitted by the Banks.

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