The Reserve Bank of India [Get Quote] on Friday further relaxed the asset classification norms for the banks to restructure loans to viable units facing cash flow problems.

The accounts which were standard on September 1, 2008, would carry the same status on restructuring if the restructuring proposal is taken up by January 31 and it is implemented within 120 days.

Through this move the regulator has given more time to banks to implement the second restructuring of loans or the first round of debt recast for commercial real estate. Earlier, the timeframe specified for rolling out restructuring package was 90 days.

Also, the special regulatory treatment would also be available to "standard" and "sub-standard accounts" even where full security cover is not available for working capital limits. This will be applicable if banks make provisions for the unsecured portion of working capital limits.

The provision specified by the RBI is 20 per cent for standard assets, while for sub-standard assets, banks have to cover 20 per cent of the unsecured limit in the first year and additional 20 per cent for every year thereafter.