The country’s banking regulator – Reserve Bank of India (RBI) – has filed fresh affidavit in the Supreme Court in the loan moratorium case.
In the affidavit, RBI also stated that it is not possible to extend the moratorium period beyond six months. Explaining its reason, RBI said that exceeding the time limit may result in impacting overall credit discipline as it can widely effect the process of credit creation in the economy and also impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments.
In the new affidavit, the RBI assured that the expert committee recommendations have already looked into sector-specific conditions for loan repayment and the discretion has been given to banks and financial institutions to restructure loans as needed.
Notably, RBI brought Resolution framework dated 6.8.2020 which enables the lenders to implement a resolution plan in respect of personal loans as well as other exposures affected due to COVID-19.
RBI’s reply came after the top court was not satisfied with its earlier response and said that the response lacked ‘’necessary details’’. The SC had asked the Centre and the RBI to place on record the K V Kamath committee recommendations on debt restructuring in view of COVID-19 related stress on various sectors as well as the notifications and circulars issued so far on loan moratorium.
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