Loan recasts to only defer problem, not solve it: S&P
4 years, 6 months ago

Loan recasts to only defer problem, not solve it: S&P

The Hindu  

Amid reports of the RBI mulling restructuring of loans, global rating agency S&P on Tuesday said that a loan recast would only defer recognition of NPAs and not solve the problem. The agency also said operational outages and the recession because of the pandemic will have a deeper and longer impact on lenders than previously assumed, and estimated the gross non-performing assets ratio to rise up to 14% in FY21 from the 8.5% in FY20. Recovery to take longer “The COVID-19 pandemic may set back the recovery of India’s banking sector by years, which could hit credit flows and, ultimately, the economy,” the agency said. ‘Resolution will be slow’ Resolution of stressed or bad-debt situations will likely unfold slowly, which will leave banks saddled with a huge stock of bad loans next year as well, the agency said, estimating an improvement of only 1 percentage point in the NPA ratio in FY22.

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History of this topic

Debt recasts under RBI scheme at ₹1 trillion
3 years, 11 months ago

Debt recasts under RBI scheme at ₹1 trillion

Live Mint  

Indian banks agreed to recast loans worth ₹1 trillion under a central bank scheme, significantly lower than what was originally anticipated, signalling an improvement in borrowers’ repayment capability amid a rebound in economic activity. Although many such loan accounts may turn sour, things are likely to be better than the last round of forbearance after the global financial crisis, given …

Non-performing Loans in Indian Banking Sector to Rise in Next 12-18 Months: S&P
4 years, 1 month ago

Non-performing Loans in Indian Banking Sector to Rise in Next 12-18 Months: S&P

News 18  

Non-performing loans in the Indian banking sector is likely to witness an uptick and may shoot up to 11 per cent of gross loans in the next 12-18 months, S&P Global Ratings said on Tuesday. It said forbearance is ”masking” problem assets for Indian banks arising from COVID-19 and the financial institutions will likely have trouble maintaining momentum after the …

Only Standard Loan Accounts as of March Can Be Recast Under Pandemic Scheme, Says RBI
4 years, 3 months ago

Only Standard Loan Accounts as of March Can Be Recast Under Pandemic Scheme, Says RBI

News 18  

The Reserve Bank of India has clarified that loans which have remained standard without any defaults as of March 1, 2020, will be eligible for restructuring under the pandemic-related resolution framework issued in August. In clarifications issued late last night to borrowers as well as lenders about the August 6 circular, RBI said a loan account that was due for …

Loan moratorium: RBI likely to announce one-time loan restructuring guidelines soon
4 years, 4 months ago

Loan moratorium: RBI likely to announce one-time loan restructuring guidelines soon

Live Mint  

The Reserve Bank of India is likely to announce the financial parameters of its proposed loan restructuring scheme soon. In his interview to CNBC Awaaz, RBI Governor Shaktikanta Das said that banks can extend the loan moratorium by 3, 6 or even 12 months under the one-time restructuring. To mitigate the hardships faced by the borrowers during coronavirus pandemic, the …

Govt asks banks to roll out loan restructuring scheme by Sep 15, provide support to borrowers
4 years, 4 months ago

Govt asks banks to roll out loan restructuring scheme by Sep 15, provide support to borrowers

India TV News  

Finance Minister Nirmala Sitharaman on Thursday asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15, and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. During the meeting, the minister impressed upon the lenders that as and when the moratorium on loan repayments is lifted, borrowers …

Finance Minister Asks Banks to Roll Out Loan Restructuring Scheme by September 15
4 years, 4 months ago

Finance Minister Asks Banks to Roll Out Loan Restructuring Scheme by September 15

News 18  

Finance Minister Nirmala Sitharaman on Thursday asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15, and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. During the meeting, the minister impressed upon the lenders that as and when the moratorium on loan repayments is lifted, borrowers …

Loan moratorium: Banks shouldn’t declare accounts as NPAs till further order, says SC
4 years, 4 months ago

Loan moratorium: Banks shouldn’t declare accounts as NPAs till further order, says SC

Live Mint  

The Supreme Court of India on Thursday passed an interim order saying that the accounts not declared as non-performing asset as on 31 August shall not be declared as NPAs till further notice. The apex court on Thursday heard a batch of petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India. While arguing whether banks should …

RBI May Not Extend Moratorium on Repayment of Loans Beyond August 31
4 years, 4 months ago

RBI May Not Extend Moratorium on Repayment of Loans Beyond August 31

News 18  

The Reserve Bank is unlikely to extend the moratorium on repayment of bank loans beyond August 31 as an extension could impact the credit behaviour of borrowers without resolving the issues being faced by them following the outbreak of the COVID-19, sources said. It was only a temporary reprieve to borrowers affected by the pandemic, the sources said, adding that …

RBI chief says loan restructuring plan will help revive Indian economy
4 years, 4 months ago

RBI chief says loan restructuring plan will help revive Indian economy

Live Mint  

New measures to allow Indian lenders to restructure loans will provide a “durable” resolution for cash-strapped businesses and help revive the economy, according to the central bank’s chief. “On one hand health of banks is very important and on the other hand businesses are under a lot of stress due to covid,” Reserve Bank of India Governor Shaktikanta Das said …

Coronavirus Lockdown: RBI may extend moratorium on repayment of loans for three more months, says report
4 years, 7 months ago

Coronavirus Lockdown: RBI may extend moratorium on repayment of loans for three more months, says report

Firstpost  

With the government extending the nationwide lockdown up to 31 May, the Reserve Bank of India is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report Mumbai: With the government extending the nationwide lockdown up to 31 May, the Reserve Bank of India is likely to extend the moratorium on …

NPA issue: Will RBI's 12 February circular help expedite bad loan recovery? Signs indicate it is on right path
5 years, 10 months ago

NPA issue: Will RBI's 12 February circular help expedite bad loan recovery? Signs indicate it is on right path

Firstpost  

This smorgasbord of schemes didn’t even dent the NPA problem. In a way, 12 February, 2018 marked the end of an era best characterised by the late J Paul Getty, oil billionaire, who said, “When you owe the bank $100, it’s your problem; when you owe the bank $100 million, it’s the bank‘s problem”. Out of a total of more …

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