<div>The Reserve Bank of India (RBI) said on Thursday (24 September) it would allow banks to convert the status of their "stressed" loans to a company into "standard" ones if the entity is sold to a new major stakeholder, although certain conditions would apply.</div><div> </div><div>The change is important, given that in India a loan deemed as "stressed" must follow strict recovery rules, while "standard" ones offer much more flexibility in how companies repay their debt.</div><div> </div><div>Among the conditions that must be met, the RBI said the new so-called promoter, or major stakeholder, must buy at least 51 per cent of the paid-up equity capital of the company.</div><div> </div><div>The new promoter can also not have any ties to the existing stakeholder.</div><div> </div><div>India's banking sector, dominated by more than two-dozen state-run lenders, has been hobbled by its highest bad-loan ratio in a decade as slower economic expansion hurt companies' abilities to service debt.</div><div><br>(Reuters)</div>
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