When a loan defaults, the clock starts. The review period begins within 30 days. If the borrower has multiple lenders, the Inter-Creditor Agreement kicks in — 75% by value must agree on a resolution plan. If the plan isn't implemented within 180 days, additional provisioning of 20% hits the bank's books. At 365 days, it's 35%. If fraud is detected, it's 100% immediately, regardless of security held.
This framework — rebuilt from scratch in June 2019 after the Supreme Court struck down the RBI's February 2018 circular — governs how India's banking system deals with its Rs 4+ lakh crore NPA problem. 109 resolution notifications, 133 NPA/IRAC notifications, 86 fraud classification notifications, and 58 wilful defaulter notifications build this architecture.
See also: Securitisation & Asset Reconstruction | How PMC Bank Failed
For the narrative version, see What Happens After a Loan Goes Bad