In a clarification issued by the Reserve Bank of India (RBI), it has outright stated that only those loans which have remained standard and without any defaults until March, 1 this year, will be eligible for restructuring under the latest pandemic relief measures provided jointly by the RBI and the Finance Ministry.
The August 6 circular calling for restructuring had left both the banks and borrowers in a spree of confusion, the circular issued last night addressed several points of concern.
RBI clarifies the terms of loan restructuring
RBI also stated that any restructuring of under-implementation project loans involving deferment of date of commencement of operations (DCCO) are excluded from the scope of the current resolution framework and that such accounts will continue to be governed by the pre-march frameworks and/or guidelines.
An inter-creditor agreement is now required for single borrowers and numerous creditors, as per the circular.
The RBI also stated that for loans above 100 crores, in case independent evaluation from more than one credit agency is required, all such credit opinions must be RP4 rating or above.
All farm credit exposures, including non-banking financial institution (NBFCs), were also allowed be recast under the scheme, but similar loans to allied activities such as fisheries, animal husbandry, poultry, pisciculture and sericulture were willfully excluded from the scope of the resolution framework.
The borrowers not eligible for resolution under the current scheme will have to adhere to the extant instructions as before 1st March 2020. All microfinance institution/self-help group loans meeting the basic eligibility criteria, unless covered by the specific exclusions, are eligible resolution but personal loans from these categories will not be allowed to be restructured, the circular clarified.