RBI Loan Restructuring Scheme: RBI sets up panel to deal with coronavirus

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In its financial policy review on Thursday, the Reserve Bank of India provided the agreement to an RBI Loan Restructuring Scheme for stressed borrowers. A special window granting one-time loan restructuring to companies and individuals, it will give relief particularly to those affected by the Covid-19 pandemic. However, Under the COVID Loan Restructuring Scheme, consumers may get more delay on repayment of the loan – including home loan, car loan, education loan, gold loan, loan against securities, etc. However, buyers may also get the benefit of the scheme. 

Let us understand in details –

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Advantages from the RBI COVID Measures?

  • For corporate borrowers, banks can request a resolution plan. 
  • Moreover, such loan accounts should remain to be standard until the date of invocation.
  • Also, the one-time restructuring window is available across sectors.
  • Provide relief to companies servicing loan obligations on time.
  • Ensure to provide an RBI Loan Restructuring Scheme. 

How RBI Loan Restructuring Scheme executed?

The RBI has set up a five-member authority committee which will make proposals on the financial parameters needed. Moreover, the RBI has provided broad contours. The panel will recommend the sector-specific benchmark ranges for such parameters to be factored into each resolution plan. According to the RBI’s systemic risk survey, the three sectors most adversely influenced by the pandemic are tourism and hospitality, construction and real estate, etc.

Does the current scheme have guards against misuse?

Moreover, the RBI Loan Restructuring Scheme has built-in safeguards in the resolution framework to assure it does not lead to the ever-greening of bad loans as in the past. Restructuring of large exposures will require fair credit evaluation done by rating agencies and process validation by the expert committee.

However, if you have required any other guidance please feel free to contact our business advisors at 8881-069-069.

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