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Updated August 30th, 2020 at 17:25 IST

FM Nirmala Sitharaman to meet bankers on loan recast on Thursday

Finance Minister Nirmala Sitharaman will hold a review meeting with bankers and heads of non-banking financial companies (NBFCs) on September 3

Nirmala Sitharaman
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Ahead of the roll out of one-time debt recast for resolution of COVID-19 related stress in bank loans, Finance Minister Nirmala Sitharaman will hold a review meeting with bankers and heads of non-banking financial companies (NBFCs) on September 3 for smooth and speedy implementation of the scheme.

"The review (meeting) will focus on enabling businesses and households to avail of the revival framework on the basis of viability, necessary steps like finalising bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation," the Finance Ministry said in a statement.

The finance minister will review the implementation of the resolution framework for COVID-19 related stress in bank loans on Thursday with the top management of scheduled commercial banks and NBFCs, it said.

READ: Nirmala Sitharaman congratulates Team India on entering FIDE Chess Olympiad quarter-finals

The Reserve Bank of India (RBI) earlier this month permitted one-time restructuring of both corporate and retail loans. Banks are in the process of getting a board-approved restructuring framework in line with RBI''s framework and eligibility defined by the central bank in its notification on August 6. Restructuring benefit can be availed by those whose account was standard on March 1 and defaults should not be over 30 days.

Besides, the K V Kamath committee is working on recommendations on financial parameters like debt service coverage ratio, debt-equity ratio post-resolution, and interest coverage ratio for recasting corporate loans. Its recommendations will be notified within 30 days of setting up of the panel, which means the notification should be out by September 6. The resolution plans to be implemented under the framework may include conversion of any interest accrued, or to be accrued, into another credit facility, or granting of moratorium and/or rescheduling of repayments, based on an assessment of income streams of the borrower, up to two years.

While the resolution under this framework can be invoked till December 31, 2020, the lending institutions have been encouraged to strive for early invocation in eligible cases, particularly for personal loans. 

READ: COVID-19 an 'Act of God', economy to contract this fiscal: Finance Minister Nirmala Sitharaman

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Published August 30th, 2020 at 17:24 IST

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