Scheme for Sustainable Structuring of Stressed Assets

In an another attempt to arrest rising bad loans, the Reserve Bank of India has notified the Scheme for Sustainable Structuring of Stressed Assets also known as S4A to restructure the unsustainable debt of corporates.


For being eligible under the scheme, the borrowal account should meet the following conditions:

  • The project has commenced commercial operations;
  • The aggregate exposure (including accrued interest) of all institutional lenders in the account is more than Rs.500 crore (including Rupee loans, Foreign Currency loans/External Commercial Borrowings,);
  • The debt meets the test of sustainability as outlined by RBI.

A debt level will be deemed sustainable if the Joint Lenders Forum (JLF)/Consortium of lenders/bank conclude through independent techno-economic viability (TEV) that debt of that principal value amongst the current funded/non-funded liabilities owed to institutional lenders can be serviced over the same tenor as that of the existing facilities even if the future cash flows remain at their current level. For this scheme to apply, sustainable debt should not be less than 50 percent of current funded liabilities.

The JLF/consortium/bank shall, after an independent TEV, bifurcate the current dues of the borrower into:

  • Sustainable: The level of debt that can be serviced (both interest and principal) within the respective residual maturities of existing debt, from all sources, based on the cash flows available from the current as well as immediately prospective (not more than six months) level of operations
  • Unsustainable: Difference between total outstanding debt and sustainable debt.

The unsustainable part shall be converted into equity/redeemable cumulative optionally convertible preference shares

Overseeing Committee (OC)

  • An Overseeing Committee (OC), comprising of eminent persons, will be constituted by IBA in consultation with RBI. The members of OC cannot be changed without the prior approval of RBI.
  • The resolution plan shall be submitted by the JLF/consortium/bank to the OC.
  • The OC will review the processes involved in preparation of resolution plan, etc. for reasonableness and adherence to the provisions of these guidelines, and opine on it.
  • The OC will be an advisory body

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