Sitharaman holds a meeting to expedite the resolution of loan accounts and review various schemes' progress through video conferencing in New Delhi. (Credit: PIB Delhi)

Sitharaman holds a meeting with lenders on loan recast

Finance Minister Nirmala Sitharaman held a meeting with the heads of Scheduled Commercial Banks and Non-Banking Financial Companies through video conferencing. This step aimed to review their state of preparedness to implement the loan resolution framework for COVID-19 related stress. In the meeting, Sitharaman underlined that as and when the moratorium on loan repayments lifts, they must give support to borrowers. She added that COVID-19 related distress must not impact the lenders’ assessment of their creditworthiness.

Sitharaman emphasized that lenders must roll-out resolution schemes by 15th September 2020. They should carry-out a sustained media campaign to create awareness after that. She advised lenders to regularly update frequently asked questions on the resolution framework on their websites in primary and secondary languages. Also, they must circulate these to their offices and branches. The Ministry of Finance is also keeping engaged with RBI to ensure that they assist the lenders in the resolution process.

Sitharaman reviewed the progress made by various lenders under the Emergency Credit Line Guarantee Scheme, Partial Credit Guarantee Scheme 2.0, and Subordinate Debt Schemes, which the government had announced as part of the ‘Aatm Nirbhar Bharat Abhiyaan.’ She appreciated their efforts during the lockdown in the effective implementation of Pradhan Mantri Garib Kalyan Yojana as well. Sitharaman exhorted the lenders to proactively respond to the needs of companies, businesses, and individual borrowers, extending the maximum possible relief before the festive season.

The lenders assured that they are ready with the respective resolution policies. They have started identifying and reaching out to eligible borrowers and will comply with the Reserve Bank of India (RBI).