By Ankur Mishra<\/strong><\/p>\nIn a move that will bring relief to banks and borrowers, the Reserve Bank of India (RBI) has allowed lenders to restructure loans that are stressed purely on account of the pandemic. \u201cThe resolution under this facility is provided only to the borrowers having stress on account of Covid-19,\u201d RBI governor Shaktikanta Das said on Thursday.<\/p>\n
The rules allow lenders to extend the tenure of the loans, sanction additional credit and also provide a moratorium of up to two years. The RBI will also permit conversion of debt into securities. Loans to both companies and individuals can be recast, the central bank said while tweaking the rules to enable more MSMEs to take advantage of an existing restructuring scheme.<\/p>\n
To be eligible, a customer should have had no more than 30 days of dues as on March 1. While banks can classify these recast exposures as standard assets, they need to make a capital provision of 10%; any bank that does not sign the inter-creditor agreement must provide 20%. Lenders must invoke a resolution plan by December 31 and implement it within 180 days from the date it is invoked.<\/p>\n
A committee headed by former banker KV Kamath, will assist RBI with finalizing the rule and regulations for the debt recast and vetting resolution plans where the debt is more than Rs 1,500 crore.<\/p>\n
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