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Explained: RBI’s new loan recast scheme

Explained: RBI’s new loan recast scheme

In its monetary policy review on Thursday, the Reserve Bank of India gave the green signal to a loan restructuring scheme for stressed borrowers. A special window providing one-time loan restructuring to companies and individuals, it will provide relief specifically to those impacted by the Covid-19 pandemic.

Who will benefit from the scheme?

Only those companies and individuals whose loans accounts are in default for not more than 30 days as on March 1, 2020, are eligible for one-time restructuring. For corporate borrowers, banks can invoke a resolution plan till December 31, 2020 and implement it till June 30, 2021. Such loan accounts should continue to be standard till the date of invocation. The one-time restructuring window is available across sectors.

It is expected to provide relief to companies that were servicing loan obligations on time but could have found it difficult after March, as the pandemic affected their revenues

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