Disconnect Between Stock Market and Real Economy; Correction in Store, Says RBI Governor

Referring to the winding down of six debt schemes of Franklin Templeton Mutual Fund, he said the RBI took a proactive step by opening a Rs 50,000 crore liquidity window for the mutual fund industry. Das also said the loan moratorium announced by RBI at the onset of the pandemic was a temporary solution for COVID-19-related stress. The moratorium ends on August 31. The central bank earlier this month permitted one-time restructuring of both corporate and retail loans. “As far as I know, all banks will get in place a board-approved restructuring framework by August 31 and subsequently implement them,” he said.

Who all will benefit from the restructuring will be decided by the banks, he said, adding eligibility has already been defined by the RBI in its notification on August 6. Restructuring benefit can be availed by those whose account was standard on March 1 and defaults should not be over 30 days, as per the notification.

Das also said the earlier announced KV Kamath committee will give recommendations on some financial parameters like debt service coverage ratio, debt equity ratio post resolution and interest coverage ratio. The five-member panel is only looking at the large corporate loans and not the retail advances, he added.