Finance Minister Nirmala Sitharaman on Thursday asked bank chiefs to be ready with board-approved policies on the RBI’s one-time asset restructuring proposal, identify eligible borrowers and quickly reach out to them to extend support as and when the moratorium on loan repayments is lifted, post the Supreme Court’s verdict.

In view of the Covid pandemic, the RBI had in March allowed lenders to allow a repayment moratorium for three months till May 31 for various categories of loans. This relief was further extended by three months.

The Finance Minister told the lenders to rollout resolution schemes by September 15 so that there is quick implementation of a sustainable revival plan for every viable business.

As and when the moratorium on loan repayments is lifted, borrowers must be given support, Sitharaman said at a virtual review meeting she had with heads of Scheduled Commercial Banks and NBFCs. But she cautioned that Covid-related distress must not impact the lenders’ assessment of the borrowers’ creditworthiness.

Among those who could benefit from the RBI’s one-time restructuring proposal include companies such as SpiceJet and GoAir; infrastructure companies, large hotels and resorts, tourism outfits, non-Covid pharma units, and auto-component makers. To be eligible for restructuring, they have to be a standard account and not an NPA.

Senior Finance Ministry officials are also understood to have told bank chiefs to be ready with policies without waiting for the recommendations of the KV Kamath committee, sources said.

Bankers were told they could always tweak the policies once the Kamath panel recommendations, which are expected soon, are ready. The RBI had on August 7 set up a five-member panel under former ICICI Bank CEO KV Kamath to recommend the financial parameters to be considered in the restructuring of loans. This panel will vet loans above ₹1,500 crore.

The Finance Minister called for a sustained media campaign to create awareness on the resolution schemes framed by banks.She advised lenders to ensure that regularly updated FAQs on the resolution framework are uploaded on their websites in Hindi, English and regional languages, and that these also circulated to their offices and branches.

Ready, say bankers

For their part, bankers assured the Minister 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 RBI, an official release said. The Finance Ministry has also been engaging with the RBI to ensure its assistance to lenders in the resolution process.

Review of other credit lines

Sitharaman also reviewed the progress made by lenders under the Emergency Credit Line Guarantee Scheme(ECLGS), the PCGS 2.0 (Partial Credit Gurantee Scheme) and Subordinate Debt Schemes announced as part of the ‘Aatmnirbhar Bharat Abhiyaan’, and advised lenders to try and extend the maximum possible relief to borrowers before the festival season.

An amount of ₹1.58-lakh crore has been sanctioned as on August 31 under the ECLGS, out of which more than ₹1.11-lakh crore has been disbursed. Under the PCGS 2.0, Bonds/CPs of ₹25,055.5 crore have been approved for purchase by public sector banks so far, out of which ₹13,318.5 crore, or more than 53 per cent of the portfolio, pertains to Bonds/CPs rated below AA-. The Scheme has, thus, been a crucial intervention for lower rated Bonds/CPs.

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