Govt keen on one-time restructuring of loans by RBI: Sources

Govt keen on one-time restructuring of loans by RBI: Sources

The government is keen on the Reserve Bank allowing a one-time restructuring of loans by banks, because of the stress being faced by many borrowers in the wake of the COVID-19 pandemic, sources in the government told CNBC-TV18.

Sources said that the decision on restructuring and the details of such a move would be up to the RBI.

Many bankers have been vocal in their plea for a one-time restructuring of the loans, rather an extension of the moratorium by the RBI.

Initially, the RBI allowed banks to grant a moratorium on term loans to their borrowers till May 31, and later extended the deadline to August 31.

The six-month moratorium allows borrowers a breather by pausing EMI payments and helping them conserve cash. At the same time, it also allows banks to keep such accounts standard. But the relief is limited in nature.

Banks fear that come August 31st, when the moratorium is lifted, many may not have sufficient capital to start paying immediately. This may lead to a rise in defaults. Instead, what banks have sought is a one-time restructuring of accounts. This will allow them to ease repayment terms for borrowers genuinely impacted by COVID-19 and match the repayment with their cash flows, thereby averting a default.