Banks have petitioned the Reserve Bank of India (RBI) that the 180-day timeline for implementing resolution plans for borrower accounts under the August 6, 2020 circular on “Resolution Framework for Covid-19-related Stress” should be extended as few of them are facing headwinds due to second pandemic wave.
As per the circular, resolution of exposures (other than personal loans) must be implemented within 180 days from the date of invocation (not later than December 31, 2020). So, the resolution plan has to be implemented by June-end 2021. But in view of the adverse impact of Covid-19, banks want leeway of 90 more days in implementing the resolution plan.
Banks also want RBI to consider a three month loan moratorium for retail and micro, small and medium enterprise (MSME) borrowers so that they can weather the Covid challenge without worrying about servicing loans.
Banks have also requested the Government to extend the emergency credit line guarantee scheme (ECLGS) for Business Enterprises/ MSMEs beyond the June 30, 2021 deadline. This scheme is aimed at helping Business Enterprises/ MSMEs meet their working capital needs. A banker observed that RBI is examining lenders’ pleas and is likely take a call by May-end.