FM Sitharaman to review implementation of loan restructuring
The meeting will focus on ways to enable businesses and households to benefit from the one-off loan restructuring program announced by the Reserve Bank of India (RBI) on the basis of their viability, according to a finance ministry statement on Sunday. .
The agenda will include the steps needed to finalize the banking policy, the framework for identifying eligible borrowers, and addressing issues that may hinder a swift and smooth implementation of the program, he said.
On August 6, the RBI announced a one-time loan restructuring program in the corporate and retail sectors that would allow loan accounts stressed due to the pandemic not to be classified as non-performing assets by lenders. .
RBI Governor Shaktikanta Das said the program would be delivered through a special window as part of the June 7 stressed asset resolution.
Only accounts in default for no more than 30 days on March 1 would be eligible and would not result in a change of business owner.
To ensure past bad experiences with loan restructuring do not happen again, the central bank appointed a committee headed by KV Kamath to suggest a framework for the implementation of the program.
The five-member committee, whose report is expected on September 6, will also validate resolution plans for accounts with a cumulative debt of Rs 1,500 crore and more.
In cases where the aggregate debt is greater than Rs 100 crore, lenders will need to obtain an independent credit assessment for the resolution plan from a recognized credit rating agency.
Restructuring plans can be invoked at any time before December 31 by banks and must be implemented within 180 days of invocation. While maintaining a standard classification on these accounts, banks are required to set aside provisions up to 10%.