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What is Joint Lenders Forum?

RBI has advised banks to report, the details of accounts having aggregate fund-based
and non-fund based exposure of Rs.50 million and above with them and showing signs of
stress (accounts where principal or interest payment is overdue for more than 30 days or
accounts showing signs of incipient stress), to Central Repository of Information on Large
Credits (CRILC).
Where the principal or interest payment of an account reported to CRILC is overdue
between 61-90 days and if the aggregate exposure (AE) [fund based and non-fund based
taken together] of lenders in that account is Rs 1000 million and above, the lenders should
mandatorily form a committee to be called Joint Lenders Forum (JLF) . Lenders also have
the option of forming a JLF even when the AE in an account is less than Rs.1000 million
and/or when the principal or interest payment is overdue for a period less than 61-90
days.

For whom it is formed?


If there is an existing Consortium Arrangement for consortium accounts, then it will serve
as JLF with the Consortium Leader as convener. For accounts under Multiple Banking
Arrangements (MBA), the lender with the highest AE will convene JLF at the earliest and
facilitate exchange of credit information on the account. In case there are multiple
consortium of lenders for a borrower (e.g. separate consortium for working capital and
term loans), the lender with the highest AE will convene the JLF.
The lenders are required to formulate and sign an Agreement (which may be called JLF
agreement) incorporating the broad rules for the functioning of the JLF. The JLF should
explore the possibility of the borrower setting right the irregularities/ weaknesses in the
account. The JLF may invite representatives of the Central/ State Government/ Project
authorities/ Local authorities, if they have a role in the implementation of the project
financed.

Eligibility criteria clearly defined to avail benefit

Under the JLF framework for revitalising distressed assets in the economy, even before a loan

account turns into an NPA, the new system helped identify the stress by segregating the accounts

into three categories

Special Mention Accounts (SMA)

SMA-0 --> if <30 days + sign of incipient stress

SMA-1 --> loan overdue for 31-60 days

SMA-2. --> if >60 days


JLF tackles stressed loans but progress is slow because of differences among creditors

on how best to resolve them.

Under the stressed asset norms of RBI that took effect on 1 April 2014, as soon as

interest payments on a loan are delayed by 60 days, a JLF comprising all lenders must be

put in place

And within 45 days, the JLF must come up with a corrective action plan (CAP) and decide

whether the debtor merely needs some hand-holding, or if the forum should opt for debt

restructuring or recovery.

Advantage to Banks

All JLF cases should be subject to credible independent scrutiny on expected future cash

flows and where these do not support the current level of debt, SDR; recovery or

rectification process needs to start significantly earlier.

JLF as a construct should be retained as it is able to get the stakeholders on the table and

make quick decisions

This may be painful in the short term, it is likely to yield much better results over the

medium term for the banking system.

Advantage to Company

The measures are intended to turn-around the entity/company without any change in terms and

conditions of the loan.

Lists of RBI circulars to refer

Sr.
Particular Reference Link
No.
Framework for Revitalizing Distressed
Assets in the Economy Guidelines on https://www.rbi.org.in/scripts/Notificatio
1
Joint Lenders Forum (JLF) and Corrective nUser.aspx?Id=8754&Mode=0
Action Plan (CAP)
Framework for Revitalizing Distressed
https://rbi.org.in/scripts/NotificationUser.as
Assets in the Economy Review of the
2 px?Id=10034&Mode=0
Guidelines on Joint Lenders Forum (JLF)
and Corrective Action Plan (CAP)
Source: RBI

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