What is Joint Lender’s Forum (JLF)?

There are several arrangements now with the RBI, for fighting the Non-Performing Assets (NPAs) with the banking system. One such arrangement is the formation of Joint Lenders’ Forum which is a body comprised of banks who have given loan to the concerned borrower entity.

The Joint Lender’s Forum is a dedicated grouping of lender banks that is formed to speed up decisions when an asset (loan) of more Rs 100 crore or more turns out to be a stressed asset. RBI has issued guidelines for the formation of JLF in 2014 for the effective management of stressed assets. Instructions for the formation of JLF is mentioned in the RBI guideline titled ‘Framework for Revitalizing Distressed Economy’ (2014).

The existing guidelines says that “as soon as an account is reported to CRILC as SMA-2, all lenders, including NBFCSIs, (Non-Banking Financial Companies-Systemically Important) should form a lenders’ committee to be called Joint Lenders’ Forum (JLF) under a convener and formulate a joint corrective action plan (CAP) for early resolution of the stress in the account.” (source: CAFRAL).

CRILC or the Central Repository of Information on Large Credits (CRILC) is an arrangement created by the RBI that collects information about loans of Rs 50 crore and more. The data about such big borrowers are kept and transferred to banks. SMA -2 or Special Mention Accounts -2 are loans that reports repayment problems for the last 60 days.

Main purpose of JLF is to revive accounts that are stressed. The JLF has to initiate Corrective Actions when an account becomes the potential of being an NPA. As per the present norm, the JLF can take steps when an account with a size of More than Rs 100 crores or more doesn’t return payments and becomes a special mention account.

The RBI has instructed banks to form JLF Empowered Group (JLF-EG) to approve the restructuring package for stressed loans.

Corrective Action Plan (CAP) by JLF should be aimed to make an early solution to the stressed asset problem. The JLF can initiate rectification, recovery and restructuring as part of the CAP. 

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