NEW DELHI: Finance minister Nirmala Sitharaman will meet top officials of scheduled commercial banks and non-banking financial companies (NBFCs) on 3 September to review the implementation of a resolution plan for loans stressed due to the coronavirus pandemic.
“The review will focus on enabling businesses and households to avail the revival framework on the basis of viability, necessary steps like finalizing bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation,” the finance ministry said in a statement on Sunday.
This meeting will happen ahead of the K.V. Kamath-led panel’s recommendations on the eligibility parameters for restructuring of loans hit by the covid-19 crisis. Earlier this month, the Reserve Bank of India (RBI) governor Shaktikanta Das had said that a resolution framework for all covid-19 related stressed accounts will be finalized by 6 September. Restructuring some loans will support economic recovery and help businesses tide through the crisis.
While the Kamath committee recommendations are expected to focus on corporate loan portfolio, bankers are worried about the unsecured retail loan portfolios once the moratorium on debt repayments ends on Monday, Mint reported on Saturday. State Bank of India (SBI) chairman Rajnish Kumar had also said that the bank is readying to deal with a higher volume of personal loan requests after the end of the moratorium.
Kumar said he does not expect many debt recast requests from large companies as most large stressed assets have gone through several rounds of clean-up.
Meanwhile, banks have also started an exercise to identify borrowers eligible for one-time debt restructuring.
Last week, Punjab National Bank (PNB) said 5-6% of its loan book may be eligible for a one-time debt recast. The state-run bank hopes to get a clearer picture by September, when guidelines from the Kamath committee on debt recast are expected to be released.
In March, RBI had allowed a moratorium on the repayment of term loans to provide relief to borrowers for three months, which was further extended by another three months.
Thereafter, the central bank said debt recast for both corporate and retail borrowers will be allowed and lenders can extend the repayment period by a maximum of two years.
—PTI

Press Trust of India