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Banks told to be ready with lists for loan recast


(This story originally appeared in on Aug 13, 2020)

NEW DELHI: Banks have been advised to be ready with the list of borrowers who will be eligible for one-time debt restructuring under a special window opened by the Reserve Bank of India (RBI) to tackle stress due to the Covid-19 pandemic.

There have been doubts over the one-time loan restructuring scheme being fully available, given that the committee under veteran KV Kamath will start functioning after a few days and will have another 30 days to submit its recommendations before the RBI notifies the norms. The committee has been tasked with working out the broad parameters for loan restructuring and vet if the process is being followed or not, without getting into specifics of the case.

The scheme has been formulated in consultation with the banks and the issues have been discussed by the RBI and lenders in detail, sources told TOI. Besides, the regulator has made it clear that banks will have a list of cases where the default was under 30 days after the six-month standstill ends on August 31.

In addition, they will also have the track record of the borrower, which will help them prepare a list of possible beneficiaries, and they can decide the eligibility norms and start implementing it once the final guidelines are out. Banking sources also said that banks have four months up to December to finalise the issues and then up to six months to implement them.

The RBI has made it quite clear that it does not want an open-ended scheme to avoid a repeat of the 2008-09 situation. Bankers and a section within the government are keen that the loan restructuring package should be rolled out faster to help several crucial services sector industries – such as tourism, hospitality and civil aviation – regain some momentum.


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