Mumbai: The RBI on Thursday said it will provide a debt resolution window to enable lenders to implement a resolution plan in respect of eligible corporate exposures as well as personal loans, keeping the ownership unchanged, and without classifying them as non-performing loans.
The central bank also provided a fresh lifeline to millions of stressed small businesses by extending the provision of restructuring of loans.
Analysts said the step was in the right direction and would cover roughly 50-55 per cent of the loans in the banking system. Bankers heaved a sigh of relief as contrary to some expectations, the central bank did not announce an extension of loan moratorium, which was ending on August 31.
“Bankers were against extension of loan moratorium as it was creating instability in the banking system. Also, the smaller NBFCs were not able to raise money to ensure cash flows. For borrowers too, the interest was getting compounded,” said Abhimanyu Sofat, head of research at IIFL Securities.
Governor Shaktikanta Das noted that the disruptions caused by coronavirus have led to heightened financial stress for borrowers across the board.
“A large number of firms that otherwise maintain a good track record under existing promoters face the challenge of their debt burden becoming disproportionate, relative to their cash flow generation abilities,” Das said.