RBI Forms Committee For Recommendations On Restructuring Of Corporate Loans

The Reserve Bank of India on (RBI) on Friday announced the members and mandate of the expert committee formed to recommend parameters for one-time restructuring of corporate loans. The committee headed by veteran banker KV Kamath, will also include Vice President of Asian Development Bank (ADB) Diwakar Gupta, Chairman of Canara Bank TN Manoharan, Ashvin Parekh and the Chief Executive Officer of the Indian Banks' Association (IBA), RBI said in an official release.

Mr Gupta and Mr Manoharan will join the committee after their respective tenures at ADB and Canara Bank get over, the release also stated. The IBA will function as the Secretariat to the committee and the committee can invite other individuals, the release also said.

The announcement comes a day after RBI Governor Shaktikanta Das, on Thursday, briefed on the loan resolution plan approved during the policy review meeting of the central bank. 

The committee formed on Friday will formulate sector-specific resolution plans for all accounts with total loan exposure of Rs 1,500 crore and above, RBI said. The committee will submit its recommendations to RBI in 30 days.

Resolution under this window will be extended only to borrowers facing stress on account of the COVID-19 pandemic and were classified as 'standard'  but not in default for more than 30 days with any lending institution as on March 1, 2020, RBI had said in a separate release on Thursday. It also said that the resolution plan may be invoked anytime till December 31, 2020 and shall have to be implemented within 180 days from the date of invocation.

Bankers had pitched for a one-time loan recast of accounts facing challenges due to the pandemic and IBA had also given its recommendation on the same to RBI. Last week, Finance Minister Nirmala Sitharaman had said the government is working with the RBI on the need for restructuring of loans to help the industry tide over the impact of COVID-19.