The provided text does not describe an "R&R Bank" as a specific institution. Instead, it refers to the process of "Reschedule and Restructure" (R&R) of loans or financing within the context of a bank, specifically mentioning EXIM Bank's internal credit policies.
Essentially, R&R in this context is about adjusting the terms of existing loans. This is done for a number of reasons, which are indicated in the provided text:
Understanding Rescheduling and Restructuring (R&R) of Loans
Here is a breakdown of what the R&R process typically entails, based on the given reference:
- Rescheduling: This involves altering the existing repayment schedule of a loan. This could mean extending the repayment period, reducing the amount of each payment, or both.
- Restructuring: This is a more comprehensive process that involves altering other terms of the loan, in addition to the repayment schedule. This might include changing the interest rate or the type of loan.
- Purpose: The main purpose of R&R is to help borrowers who are facing difficulties in repaying their loans under the original terms. This allows them to meet their financial obligations without being classified as credit-impaired by the bank.
Key Considerations for R&R Loans
The text provides important guidelines for the R&R process:
- Credit Impairment: The R&R of loans should not lead to the classification of the loan as credit-impaired by the Bank. This means the bank must be confident that the new terms will still allow the borrower to repay the debt.
- Internal Credit Policies: For corporate loans, the R&R process will follow EXIM Bank’s internal credit policies and assessment procedures. This ensures that R&R decisions are made in a consistent and responsible manner.
Why Banks Use R&R
Banks use R&R for:
- Risk Management: R&R can help banks avoid having to classify loans as non-performing, which can negatively impact their financial health.
- Customer Support: R&R can assist struggling borrowers in managing their debts, which is often beneficial for both the bank and the client.
- Economic Stability: By working with borrowers rather than simply writing off loans, banks can contribute to economic stability.
Example of R&R
- Scenario: A business has a loan with monthly payments that are difficult to manage due to a downturn in the market.
- R&R Solution: The bank might restructure the loan to extend the repayment period and reduce monthly payments, enabling the business to continue operations.
Conclusion
The term "R&R bank" is not a recognized name for a specific bank. Instead, "R&R" in the context of banking refers to the process of rescheduling and restructuring loans, designed to help borrowers manage their debt obligations while maintaining the financial health of the bank.
