Monetary Policy: Corporate Loans One-Time Restructuring got permitted by R.B.I.

On Thursday, the Reserve Bank of India (R.B.I.) has announced its decision about the extension of one-time restructuring of loans with up to 2 years moratorium for the stressed real estate developers, corporates and individual borrowers who were affected by this Covid-19 pandemic.

K.V. Kamath headed expert committee recommended that one-time restructuring of loans should be done without classifying them as non-performing assets (NPAs).

RBI Governor Shaktikanta Das said, “It has been decided to provide a window under the June 7th Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures – without change in ownership – as well as personal loans, while classifying such exposures as standard assets, subject to specified conditions.”

R.B.I. announced further that liquidity infusion of about Rs.5000 Crores to National Housing Board (N.H.B.) should provide some relief in these difficult times.

Governor also said that the stressed MSME and large corporate loan borrowers would get an option of loan restructuring but only if they were classified as per the standards set on 31st March 2020 and this option will be available till March 2021.

Niranjan Hiranandani President – Assocham and Naredco said, “Opening up the window for the restructuring of loans to companies, individuals and MSME under mandated safeguards grants breather to the liquidity strapped industry. A flexible repayment scheme under the new resolution framework shall bring in the much-needed relief to resume operations smoothly.”

RBI Governor also revealed about the fact that the real GDP of India will trend in the negative territory for the majority of FY 20 – 21, which is causing concerns for the real estate sector as economic growth and stability is a key ingredient for its long-term growth.

With Warm Regards,

CL Bureau.