Loan restructuring: FIDC seeks clarity from RBI on relief measures



The Finance Industry Development Council (FIDC) has written to Reserve Bank of India Governor Shaktikanta Das seeking more clarity and highlighting residual issues in the NBFC sector after the announcement of relief measures for loan restructuring on May 5.

“To clarify or permit restructuring of such MSME accounts, which had been restructured under Restructuring Framework 1.0 and increasing the period of moratorium and/or extending the residual tenor up to a total of two years for MSMEs, along the same lines as the support provided to individuals and small businesses,” said the representation by FIDC, which is the representative body of assets and loan financing companies.

It has also sought inclusion of hybrid use of tractors under the definition of small businesses, thereby allowing restructuring of such mixed-use tractor (equipment) loans.

Moratorium

FIDC has asked for allowing moratorium up to an additional three years, taking both Resolution Framework 1.0 and 2.0 together, for long tenure loans (loans with a residual tenure of at least five years), over and above the period of two years.

“For loans with residual tenure of up to five years: increase the overall moratorium period by additional one year, that is overall cap of three years,” said FIDC, adding that for loans with residual tenure between five years and 10 years, the overall moratorium period should be increased by an additional two years to an overall cap of four years.

Similarly, for loans with residual tenure of over 10 years, the overall moratorium period should be increased by an additional three years to an overall cap of five years.

“It is our earnest request that on the lines of MSMEs, the individuals and small businesses, who are impacted by Covid-19, should also be allowed upgrade even if they slipped into NPA category between April 1, and the date of implementation,” said FIDC, requesting that the RBI should issue an amendment or clarification on the matter.

Given the State-level lockdowns and restrictions in movement, FIDC has also suggested permitting digital delivery of documentation. “Customers be allowed to request and invoke restructuring through video, email, SMS or WhatsApp and restructuring documentation may be allowed to be signed digitally either via e-Sign or through click-wrap method,” it has said in the recommendation.



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