With the economy under stress, the government is pushing banks to respond proactively to the needs of companies, businesses and individual borrowers to help them emerge from COVID-19-related distress. Finance Minister Nirmala Sitharaman has asked bankers to give support to borrowers when the loan moratorium is lifted.
Sitharaman has said that the COVID-19-related distress must not impact the lenders’ assessment of their clients’ creditworthiness.
The finance minister held a review meeting with the heads of scheduled commercial banks and non-banking financial companies (NBFCs) to review their state of preparedness for implementation of the loans resolution framework for COVID-19-related stress. She took note of the work done by the banks during the lockdown in effective implementation of the Pradhan Mantri Garib Kalyan Yojana and the Aatmanirbhar Bharat related measures.
During her interaction, Sitharaman asked banks and NBFCs to put in place a policy for resolution, identifying eligible borrowers, and quick implementation of resolution plan to revive viable business.
Sitharaman also said that the resolution schemes must be rolled out by lenders by September 15, 2020, and massive awareness campaigns be carried out.
The banks assured the finance minister that they are ready with their resolution policies, have started the process of identifying and reaching out to eligible borrowers, and that they will comply with the timelines stipulated by the Reserve Bank of India (RBI).
The Ministry of Finance has also been working with the RBI to ensure that the lenders are assisted by the apex bank in the resolution process.
During the meeting, the finance minister also reviewed the progress made by various lenders under Emergency Credit Line Guarantee Scheme (ECLGS) and Partial Credit Guarantee Scheme (PCGS) and Sub-ordinate Debt schemes announced as part of the ‘Aatmanirbhar Bharat Abhiyaan’.
As per figures an amount of Rs 1.58 lakh crore has been sanctioned till August 30 under ECLGS, of which more than Rs 1.11 lakh crore has also been disbursed. Under PCGS 2.0, bonds and commercial papers worth over Rs 25,055.5 crore have been approved for purchase by public sector banks so far, out of which Rs 13,318.5 crore amounting to more than 53 per cent of the portfolio pertains to Bonds, CPs rated below AA-.
