New Delhi ; RBI has come out with a scheme for resolution of bad loans of large projects wherein a portion of the debt will be converted into equity or other instruments under supervision of Indian Banks Association, IBA’s Overseeing Committee. In a statement, it said, the Scheme for Sustainable Structuring of Stressed Assets, S4A, will cover those projects which have started commercial operations and have outstanding loan of over 500 crore rupees.

It said, the scheme is an optional framework for resolution of large stressed accounts. RBI said, the S4A has been issued in order to further strengthen the lenders’ ability to deal with stressed assets. It said, the scheme will help put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties. The RBI said, the S4A envisages determination of the sustainable debt level for a stressed borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments. It said, these instruments are expected to provide upside to the lenders when the borrower turns around.