Loan Recast Will Revive Indian Economy: RBI Chief

Loan Recast Will Revive Indian Economy: RBI Chief
Aug 2020 , by , in Latest News, News/Views

New measures to allow Indian lenders to restructure loans will provide a “durable” resolution for cash-strapped businesses and help revive the economy, according to the central bank’s chief. The plan has replaced a blanket loan moratorium that’s due to expire later this month, Das said.

Indian authorities are looking to support an economy that’s been hit hard by the coronavirus, while ensuring the stability of a financial sector where bad-debt is set to swell to a two-decade high. Banks are struggling to accelerate credit growth to revive the economy, which is set for its first annual contraction in more than four decades. Lenders are also dealing with a pile of bad debt that was high even before the pandemic.

Reserve Bank of India Governor Shaktikanta Das said banks will be able to extend or provide a new moratorium to borrowers under the new plan.” On one hand health of banks is very important and on the other hand businesses are under a lot of stress due to covid. Moratorium was a “temporary solution” for lockdown and tThe plan has replaced a blanket loan moratorium

Details on the eligibility criteria for companies will be announced by Sept. 6 after an expert panel considers the financial parameters and banks will be able to internally identify the accounts they would like to restructure, Das said.

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