New Delhi: Reserve Bank of India (((RBI) Shot down a new bankruptcy stop proposal & Bankruptcy law The second wave of (IBC) Covid maintains balance sheet transparency while still making it clear that banks can restructure their non-performing loans.
In initial discussions with the government, the RBI showed that the freeze would not help anyone in the long run, as it would only show low levels of bad assets (NPA). government Sources told TOI. The government has not completely closed the door to this issue, but the reluctance of regulators will undoubtedly influence the decision.
Last year, the RBI agreed with the government’s decision to suspend IBC provisions for six months and then extended it to a year, but with reservations.Due to the last freeze, some companies NCLTAllows management to stay in the saddle. The moment the proceedings against the company are granted, the promoter loses control as the bankruptcy expert runs the show with the creditors’ committee until the resolution process is complete.
“It’s kicking the can down the road. Any banker will know the exact situation of the NPA in his book, even if it freezes, but the balance sheet will reflect that in a few quarters. “The source said.
The corporate sector has proposed a new outage, arguing that there is additional stress as a result of the blockades announced in most states to check for a surge in cases. However, officials said demand was boosted by some of the industries that were facing stress even before India, which was hit by a pandemic. In addition, corporate performance up to the March quarter has been favorable, the business has not been completely closed, and the supply chain has been opened, so this recovery is evaluated to be faster than last year. ..
Government sources say the RBI’s measures to enable restructuring of small retail and business loans will ease pressure on the most vulnerable segments. “Slightly larger borrowers have some cushioning. We continue to monitor with RBI. It will take some time to assess the full extent of the damage,” he said.
Aside from this, Ministry of Finance Also, work with state-owned lenders to see how the loan restructuring scheme announced by the RBI can be optimally implemented when many individuals may find it difficult to visit a branch. I am.But Center In addition to the restructuring provided by RBI, we announced a pre-packaged bankruptcy resolution window for SMEs, but so far limited response as most of the country began closing shortly after the mechanism. I could only see it. Install.
What’s more, sources say the RBI allows a one-time restructuring period for small businesses, and banks have the option to use the facility until June.For large players, the June 2019 circulation will be funded by banks NPA The classification does not change.
RBI: RBI opposes new bankruptcy freeze
https://economictimes.indiatimes.com/markets/stocks/news/rbi-opposes-fresh-insolvency-freeze/articleshow/82697079.cms RBI: RBI opposes new bankruptcy freeze