Sitharaman asks banks to roll out resolution schemes by 15 September

NEW DELHI: Finance minister Nirmala Sitharaman on Thursday called for “quick implementation” of banks’ resolution plans aimed at reviving businesses hit by the covid-19 pandemic, asking lenders to roll the schemes by 15 September.
Sitharaman also asked lenders to support borrowers, as and when moratorium on loan repayments is lifted, adding that the distress caused by the pandemic should not impact the lenders’ assessment of their creditworthiness.
“During her interaction, the finance minister focused on lenders immediately putting in place board-approved policy for resolution, identifying eligible borrowers and reaching out to them. Quick implementation of a sustained resolution plan by lenders for revival of every viable business,” the ministry said in a statement.
Sitharaman held a virtual review meeting with heads of banks and non-banking finance companies today for smooth and speedy implementation of the one-time debt restructuring for resolution of covid-19 related stress in bank loans.
The Reserve Bank of India (RBI) last month had permitted one-time restructuring of corporate and retail loans without classifying them as a non-performing asset (NPA).
“The lenders assured that they are ready with their resolution policies, have started the process of identifying and reaching out to eligible borrowers, and that they will comply with the timelines stipulated by the Reserve Bank of India (RBI),” the finance ministry statement added.
This meeting took place ahead of the K.V. Kamath-led panel’s recommendations on the eligibility parameters for restructuring of loans hit by the covid-19 crisis. Last month, RBI governor Shaktikanta Das had said a resolution framework for all covid-19 related stressed accounts will be finalised by 6 September. Restructuring some loans will support economic recovery and help businesses tide through the crisis.

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