Senior bank executives said
the Indian Banks' Association (IBA) has already approached the Reserve Bank of
India with a plea for easing regulatory norms.
Banks
and financial institutions expect much heavy lifting through credit support,
pegged at over Rs 11 trillion in FY21, in the days ahead. As a result, lenders
have sought the easing of NPA norms, one-time restructuring, and extension of
the moratorium till August-end for borrowers affected by the Covid situation.
Senior bank executives said
the Indian Banks’ Association (IBA) has already approached the Reserve Bank of
India with a plea for easing regulatory norms, so as to support borrowers hit
by the outbreak.
The rule stating that loans
unpaid for 90 days in a row will be categorised as non-performing
assets (NPAs) needs to be relaxed. The IBA, a banking industry lobby group,
has recommended that this period be extended from to 180 days for the current
financial year.
In FY22, it could be
restored to its original status in two stages. For first six months, loans due
for 120 or more days and remaining unpaid for 90 days, will be treated as a bad
loan. The RBI may announce its decision in the next few days.
This should also accompany
the one-time restructuring of loans, given the concerns of borrowers go beyond
liquidity. They now include viability and the capacity to change as well as
survive in different business environments, in the post-Covid world, said
bankers.
The three-month-moratorium
is nearing its end (on May 31). This breathing space has been deemed inadequate
and a further 90 days sought by the sector.
In addition, majority of
government support under the Rs 20.97-trillion package, announced to deal with
the adverse impact of the pandemic, is in the form of guarantees and interest
subventions.
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