FM asks banks to quicken loan resolution schemes

Finance Minister Nirmala Sitharaman on Thursday directed banks to roll out resolution schemes for Covid-related stress by September 15.

During her interaction with the heads of scheduled commercial banks and NBFCs through a video conference, Sitharaman focused on lenders immediately putting in place board-approved policy for resolution, identifying eligible borrowers and reaching out to them, said an official statement.

She also called for quick implementation of a sustained resolution plan by lenders for revival of every viable business.

Sitharaman told the lenders that as and when moratorium on loan repayments is lifted, borrowers must be given support and Covid-19 related distress must not impact the lenders' assessment of their creditworthiness.

Further, she also called for a sustained media campaign to create awareness among the borrowers for the resolution scheme. She advised lenders to ensure that regularly updated FAQs on the resolution framework are uploaded on their websites in Hindi, English and regional languages, and also circulated to their offices and branches.

"The lenders assured that they are ready with their resolution policies, and have started the process of identifying and reaching out to eligible borrowers, and that they will comply with the timelines stipulated by the Reserve Bank of India (RBI)," said the Finance Ministry statement.

The ministry said that it has also been engaging with the RBI to ensure that the lenders are assisted by the central bank in the resolution process.

As the pandemic has led to severe economic stress across sectors, the RBI in August announced to provide a resolution framework to enable the lenders to implement a resolution plan, in

As and when moratorium on loan repayments is lifted, borrowers must be given support and Covid-19 related distress must not impact the lenders' assessment of their credit-worthiness