For tackling with losses and accumulated losses on balance, the RBI
may restrict ailing banks
from incurring capital expenditure beyond a specified limit. The RBI will also have discretion to ask banks
to take measures to reduce interest and operating/administrative expenses.
As for action to correct capital adequacy ratio, the RBI may restrict expansion of size of the balance sheet, put curbs on fresh borrowings, except for meeting temporary liquidity mismatches.
There may be prohibition on sanction, disbursal of fresh loans and advances other than loans against collateral security of term deposits / NSCs / KVPs / insurance policies. There could be also prohibition on expansion of size of the deposits, the central bank said. Although supervisory action will primarily be based on the criteria specified under the revised SAF, the RBI will be free take appropriate supervisory action in case stress is noticed in other important indicators parameters or in case of serious governance issues.