The Reserve Bank has allowed banks to take control of debt-laden companies by converting loans into equity if a debt restructuring fails to revive them within a stipulated time frame. As per an RBI notification, allowing loan conversion will now be a pre-condition for all debt restructuring deals. A decision on invoking the Strategic Debt Restructuring by converting debt into equity has to be taken within 30 days after a review of the account. The RBI said that it should be approved by 75 percent of the creditors by value and 60 percent of creditors by number.RBI's new norms come in the backdrop of a huge surge in bad loans in the banking system. Capital markets regulator Sebi has already relaxed the norms for banks to take over the ownership of such companies under a new Strategic Debt Restructuring regime. With RBI now formalising the proposal, banks will get more teeth in recovering their dues.