RBI may offer more relief to stressed sectors

NEW DELHI: The Reserve Bank of India (RBI) may unveil more relief measures for some of the stressed sectors of the economy, especially in the services segment, as efforts are stepped up to help them emerge from the bruising impact of the lockdown.
Government sources said that such measures will likely be aimed mostly through the monetary policy side. “The government has announced a massive extension of the PM Garib Kalyan Anna Yojana till November-end. Now, the RBI is likely to announce measures for sectors such as hospitality, tourism and others,” said a source, indicating that the Centre would prefer to wait for now as far as large relief packages are concerned.
Banking sources said discussions are under way on the possible relief steps. The RBI has already unveiled a series of steps to provide comfort to industry segments by announcing a moratorium on term loans till August-end. According to banking sources, the finance ministry has sought information on bank loans to the textile sector and is keen on some relief. “Revival of this sector is seen as key to providing relief not just to the industries but also the 45 million people who are directly employed in the sector.”

However, the RBI has favoured a one-time non-discretionary and non-discriminatory relief package to stressed borrowers instead of a sector-specific scheme. Making the package a one-time relief will ensure that there is no ever-greening of loans and making it non-discretionary and non-discriminatory will remove subjectivity. Bankers point out that within each sector, there are strong and weak players.
State Bank of India (SBI) has said that since Covid-19 defaults cannot be proceeded against in insolvency courts, restructuring is the only way out.
Restructuring is possible even now but banks have to classify the loan as non-performing and make provisions out of their profits. One way out is to allow restructuring without classifying the loan as NPA. However, one of the key challenges in restructuring is getting all lenders to agree on one plan. While large lenders are willing to provide relief and write-off loans, some of the smaller ones are not in a position to do so.

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