BackFM to meet bankers Thursday to resolve stress on loans due to covid-19
This finance minister's meeting will happen ahead of the KV Kamath-led panel’s recommendations on eligibility parameters for restructuring loans hit by covid-19 crisis
PremiumNEW 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 the resolution framework for covid-19 related stress in bank loans.
"The review will focus on enabling businesses and households to avail the revival framework on the basis of viability, necessary steps like finalising bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation," the finance ministry said in a statement.
This meeting will happen ahead of the KV Kamath-led panel’s recommendations on 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 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 pandemic crisis.
Meanwhile, banks have also started the exercise to identify borrowers eligible for one-time debt restructuring. Last week, state-owned Punjab National Bank (PNB) said that 5-6% of its loan book may be eligible for a one-time debt recast. The bank hopes to get a clearer picture by September, when guidelines from the Kamath committee on debt recast are expected to be released.
While the Kamath committee recommendations will focus on corporate loan portfolio, bankers are worried about the unsecured retail loan portfolios once the moratorium on debt repayments ends on 31 August, Mint reported on August 29. State Bank of India chairman Rajnish Kumar had also said that the bank is readying to deal with a higher volume of personal loan requests after the moratorium ends on August 31. Kumar said he does not expect many debt recast requests from large firms as most large stressed assets have already gone through several rounds of clean-up.
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