RBI has released guidelines that will help banks in early recognition of bad loans and prompt steps for recovery or sale of unviable accounts. In the document called Framework for Revitalizing Distressed Assets in the Economy, RBI has asked banks to form a committee called Joint Lenders forum to formulate a plan for early resolution of stress in an account. The committee should also consider an option to transfer the promoters' holdings to a security trustee or an escrow arrangement till turnaround of company.In the new guidelines, which will be effective from April 1, the RBI has said that restructuring of a bad loan should be done in such a manner that shareholders, including promoters, bear the first loss and not the lenders. The guidelines ask banks to make future loans more expensive for borrowers who don't cooperate in resolving existing bad loans. It also offers a liberal regulatory treatment for sale of distressed asset and allows lenders to spread loss on sale of such assets over two years provided loss is fully disclosed.Through the guidelines, RBI has advised banks to refinance existing infrastructure project loans by entering into take-out financing agreements with any financial institution on a pre-determined basis. RBI has said that the refinancing institution can fix a repayment period by taking into account the life cycle of the project and cash flows from the project.Seeking improvements in the current restructuring process, the framework allows independent evaluation of large value restructuring, with a focus on viable plans and a fair sharing of losses between promoters and creditors. The framework suggests steps to enable better functioning of asset reconstruction companies, apart from encouraging sector-specific companies or private equity firms to play active role in stressed assets market.According to RBI, the amount of recast loans touched an all-time high of 4 trillion rupees or 10.2 per cent of the overall advances as of September 2013.