Longer Break May Hit Credit Discipline: RBI To Supreme Court; Other Big Stories
The Reserve Bank of India has appealed to the country's top court to let banks classify loans as nonperforming, saying a ban imposed to help borrowers in the COVID-19 pandemic could greatly harm the nation's financial system.
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The Reserve Bank of India (RBI) has told the Supreme Court that the moratorium on loan repayment cannot be extended beyond six months because that could affect "credit discipline" ; requested the Court to lift the stay on classifying defaulting accounts as non-performing assets (NPA) because not doing so would affect the central bank's regulatory powers; and pointed out that banking solutions cannot address the structural problems of the real estate sector.
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The Reserve Bank Of India (RBI) opposed extending the six months moratorium period (March 1 to August 31) any further, telling the Supreme Court that it is upto individual banks to extend the moratorium period till two years on a case to case basis. Loan moratorium exceeding six months might result in vitiating the overall credit discipline, which will have a debilitating impact on the process of credit creation in the economy, the RBI told the Supreme Court on Saturday.
