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RBI paves way for loan recasts 26 sectors identified

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RBI paves way for loan recasts 26 sectors identified

The circular issued by the Reserve Bank for resolution of the stressed assets is based on the recommendations of the K.V. Kamath Committee, which submitted its report on the 4th of September.

The 26 sectors specified by the RBI include automobiles, power, tourism, cement, chemicals, gems and jewelry, logistics, mining, manufacturing, real estate, and shipping among others.

According to RBI, the ratios prescribed are intended as floors or ceilings, as the case may be, but the resolution plans shall take into account the pre-COVID-19 operating and financial performance of the borrower and the impact of COVID-19 on its operating and financial performance at the time of finalizing the resolution plan, to assess the cash flows in subsequent years, while stipulating appropriate ratios in each case.

RBI also said, given the differential impact of the pandemic on various sectors/entities, the lending institutions may, at their discretion, adopt a graded approach depending on the severity of the impact on the borrowers, while preparing or implementing the resolution plan.

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