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Loan restructuring: FM Sitharaman to meet top executives of banks, NBFCs on Sept 3

The finance minister will review the implementation of the resolution framework for COVID-19 related stress in bank loans on Thursday with the top management of scheduled commercial banks and NBFCs, it said.

By: ENS Economic Bureau | New Delhi |
Updated: August 31, 2020 12:49:43 am
Nirmala Sitharaman, Nirmala Sitharaman RBI meeting, Nirmala Sitharaman banks meeting, Nirmala Sitharaman NBFCs meeting, Business news, Indian ExpressNew Delhi: Union Finance Minister Nirmala Sitharaman chairs the 41st GST Council meeting via video conferencing, in New Delhi, on August 27, 2020. MoS for Finance Anurag Thakur is also seen. (PTI Photo)

Finance Minister Nirmala Sitharaman will meet top executives of banks and non-banking financial companies (NBFCs) on September 3 to review the implementation of the resolution framework for stress in bank loans, caused by the unprecedented Covid-19 pandemic.

The meeting comes ahead of the expected announcement of the KV Kamath-led panel’s recommendations on eligibility parameters for the restructuring of loans to soften the blow to both borrowers and the lenders in the wake of the pandemic.

“The review will focus on enabling businesses and households to avail of 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,” a Finance Ministry statement said Sunday.

Earlier this month, the Reserve Bank of India (RBI) extended a special window for lenders to recast stressed retail and corporate loans without classifying them as non-performing, provided that they set aside 10 per cent provisions on such advances.

RBI Governor Shaktikanta Das has said a resolution framework for Covid-19-related stressed accounts will be finalised by September 6.

Already, banks have started internal processes to gauge the extent of the likely loan restructuring exercise. For instance, Punjab National Bank saw about 5-6 per cent of its loan book, or between `36,000 crore and `43,000 crore, getting recast in FY21, its managing director SS Mallikarjuna Rao said last week.

Of course, a clearer picture will emerge after the Kamath panel prescribes the contours of the recast scheme, Rao added. The current repayment moratorium will expire on Monday after six months. —FE

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