To provide a glide path to the entities which were kept out of the ambit of circular “Guidelines on Sale of Stressed Assets by Banks” dated September 1, 2016 and ensure smooth implementation of clause 77 of the MD-TLE, it is advised as under in respect of valuation of investments in SRs outstanding on the date of issuance of MD-TLE (September 24, 2021):
- The difference between the carrying value of such SRs and the valuation arrived at as on the next financial reporting date after the date of issuance of MD-TLE, in terms of clause 77 of the MD-TLE, may be provided over a five-year period starting with the financial year ending March 31, 2022 – i.e. from FY2021-22 till FY 2025-26.
- Subsequent valuations of investments in such SRs on an ongoing basis shall, however, be strictly in terms of the provisions of MD-TLE.
All lending institutions shall put in place a board approved plan to ensure that the provision made in each of the financial years in compliance with clause 2(a) above is not less than one fifth of the required provisioning on this count.
Valuation of investments in SRs made after the issuance of MD-TLE shall be strictly in terms of the provisions thereunder.
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