FM Nirmala Sitharaman to Meet Bankers on Loan Recast on Thursday

The Reserve Bank of India (RBI) earlier this month permitted one-time restructuring of both corporate and retail loans. Banks are in the process of getting a board-approved restructuring framework in line with RBI’s framework and eligibility defined by the central bank 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. Besides, the K V Kamath committee is working on recommendations on financial parameters like debt service coverage ratio, debt equity ratio post resolution and interest coverage ratio for recasting corporate loans.

Its recommendations will be notified within 30 days of setting up of the panel, which means the notification should be out by September 6.

The resolution plans to be implemented under the framework may include conversion of any interest accrued, or to be accrued, into another credit facility, or granting of moratorium and/or rescheduling of repayments, based on an assessment of income streams of the borrower, up to two years.