The Reserve Bank of India chief says that it is possible to revive India’s economy if restructuring loan plans are in place. He said that coming up with new measures to allow Indian lenders to structure loans according to the requirement will be benefiting the cash strapped business in the long run and this will help in reviving the economy.
“On one hand health of banks is very important and on the other hand businesses are under a lot of stress due to COVID,” said the Governor Shaktikanta Das in an interview with CNBC-Awaaz.
During the interview conducted on Friday, he said that later this month, the plan will complete its due which has replaced a blanket loan moratorium. He further added that moratorium was never a permanent fix but was brought during the lockdown to help things stabilize.
There are all sorts of measures that are being taken to get the economy back on track. India’s economy was as it is struggling and with coronavirus in place, the economy has been hit hard. Authorities are trying to support the economy by implementing various measures they deem fit. Even for banks, there is no good news. They are failing to accelerate credit growth to revive the economy. The country’s economy will be witnessing its first annual contraction in more than four decades. There is a ton of bad debt. Lenders are also struggling to deal with the bad debt.
Das points towards their roles in ensuring that such businesses can get some help in regulating their finances if banks bring in a little flexibility to the loan structure. “That will help the businesses to revive, jobs will be saved and in turn will help in economic revival.”
The chief also addressed the issue of a spike in the bad loans once the repayment freeze ends on August 31, which was a six-month debt. He said that banks either can provide a new moratorium to the borrowers under a new plan or go ahead with extending the existing structure.
Any further detail will be announced next month on September 6 including what will be the eligibility criteria for companies to avail of this benefit. RBI governor added that the panel still needs to consider financial parameters and give banks an edge to identify the accounts they want to restructure. In the end, he extended his support in this fight against the coronavirus pandemic and said that though he doesn’t know how long it will take but assured that all of us will definitely win this war against COVID.
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