FM tells banks to frame loan recast scheme for all viable units by Sept 15

By Administrator_India

Capital Sands

Finance Minister Nirmala Sitharaman on Thursday told banks to put in place by September 15 loan restructuring schemes to rescue all viable business units affected by the Covid-19 pandemic. She was holding a review meeting with heads of scheduled commercial banks and non-banking financial companies through videoconferencing.

Top bank executives suggested key changes to the Reserve Bank of India’s  loan restructuring scheme to accommodate borrowers who faced stress for a longer period of time, besides lowering the provisioning requirements for restructuring housing loans, the chief executive officer of a bank said, requesting anonymity.

Finance ministry officials told bankers the ministry was in touch with the RBI to ensure that the regulator provided assistance to them in the resolution process.

Stressed industries that have defaulted for more than 30 days should also get an opportunity to restructure their loan accounts, according to suggestions by the bank executives. For non-MSME account holders, such restructuring can be sought till December 31, provided that the borrower should not be in default for more than 30 days as of March 1, 2020. Banks have to implement the resolution framework within 180 days of agreeing upon the restructuring proposal.

For MSMEs, the RBI has allowed all the three types of stressed assets to avail of restructuring, provided their total exposure is not more than Rs 25 crore. But for others, including MSMEs with loan of more than Rs 25 crore, the restructuring window will not be available if they fall under the SMA-1 (31-60 days of default) or SMA-2 (61-90 days default) categories.

The RBI requires banks to make a 10 per cent provisioning for restructured accounts. “For housing loan accounts, there was a suggestion that the provisioning requirements can be reduced,” the bank chief executive cited above said.

Related Posts
FM Nirmala Sitharaman: India plans to bring digital currency by next year
FM Nirmala Sitharaman

India plans to launch digital money by 2023, according to Finance Minister Nirmala Sitharaman. "The government and RBI are looking Read more

Today, Nirmala Sitharaman will introduce the single nodal agency dashboard
Single Nodal Agency (SNA)

Finance Minister Nirmala Sitharaman will unveil a Single Nodal Agency (SNA) dashboard on Tuesday, which would allow ministries and agencies Read more

India sells a record 1.4 million tonnes of wheat in April as Black Sea supplies fall
wheat exports

According to four trade sources, India exported a record 1.4 million tonnes of wheat in April, bringing some relief to Read more

To keep edible oil prices from rising, the govt intends to reduce taxes on it
edible oil prices

According to persons acquainted with the situation, India is considering reducing tariffs on various edible oils to chill the home Read more

5 1 vote
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x