Finance Minister Nirmala Sitharaman (File photo: ANI)
NEW DELHI: Finance Minister Nirmala Sitharaman Thursday asked banks and NBFC to implement loan restructuring plan for COVID-19-related stress by September 15, and provide appropriate support to borrowers following the lifting of the moratorium on debt repayments.
The minister urged lenders to immediately implement a board-approved policy for resolution at the review meeting with heads of scheduled commercial banks and NBFCs via video conferencing.
During the meeting, the minister stressed to lenders that as the moratorium on loan payments is lifted, borrowers should be supported and the anguish related to COVID-19 should not affect the lenders’ assessment of their creditworthiness, he said. an official statement.
The six-month moratorium on the EMI payment ended on August 31.
During the three-hour meeting, according to the statement, the finance minister asked lenders to identify and contact eligible borrowers, and for the lenders to quickly implement a sustained resolution plan for the revival of all viable businesses. .
Banks are in the process of obtaining board approval restructuring framework in line with the RBI framework and eligibility defined by the central bank in its August 6 notification.
The finance minister also emphasized that lenders should implement resolution schemes by September 15, 2020, and then a sustained media campaign should be carried out to raise awareness, according to the statement.
He advised lenders to ensure that updated FAQs on the resolution framework are uploaded to their websites in Hindi, English and regional languages, and also distributed to their offices and branches, he added.
For their part, the bankers assured the Finance Minister that they are ready with their resolution policies and that they have begun the process of identifying and contacting eligible borrowers and that they will meet the deadlines stipulated by the Reserve Bank of India (RBI ).
The finance ministry has also engaged with the RBI to ensure that lenders are assisted by the central bank in the resolution process.
Last month, the RBI allowed the one-time restructuring of corporate and retail loans without being classified as a unproductive asset (NPA).
The restructuring benefit can be used by those whose account was standard on March 1 and the default values should not exceed 30 days.
In addition, the KV Kamath committee is working on recommendations on financial parameters such as debt service coverage ratio, post-resolution debt-to-equity ratio, and interest coverage ratio for the consolidation of corporate loans.
The resolution plans to be implemented under the framework may include converting any accrued or accrued interest on another credit facility, or granting a moratorium and / or rescheduling of repayments, based on an assessment of the flows of borrower income up to two years.
While resolution in this framework can be invoked until December 31, 2020, lenders have been encouraged to strive for early invocation in eligible cases, particularly for personal loans.
Last month, the state-owned National Bank of Punjab said it expects to restructure loans worth roughly Rs 40 billion according to guidelines approved by the RBI.
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