News

RBI rejects lenders' call for asset classification pause

RBI rejects lenders' call for asset classification pause

The Reserve Bank of India (RBI) has rejected requests for standstill in asset classification from banks, dashing the hopes of lenders as well as companies seeking to avoid the defaulter tag. The move is also likely to increase the burden of bad loans on the books of banks. In an email to the Indian Banks’ Association, the regulator has said that no question of forbearance arises as these companies have been under default even before March 1, 2020, after which the Covid-19 pandemic started spreading in the country.

“If a borrower has been in default even before March 1, 2020, such a default cannot be said to be as a result of the economic fallout of the pandemic,” the regulator said.

Top