FM holds review meeting with heads of Scheduled Commercial Banks & NBFCs

Finance Minister Nirmala Sitharaman held a review meeting with the heads of Scheduled Commercial Banks and NBFCs through Video Conferencing today to review their preparedness for implementation of the loan resolution framework for COVID-19 related stress.

Ministry of Financed in a tweet today said, "FM Smt. @nsitharaman held a meeting with lenders for expediting resolution of loan accounts and reviewing the progress of Emergency Credit Line Guarantee Scheme (ECLGS), Partial Credit Guarantee Scheme(PCGS) 2.0 and Sub-ordinate Debt Scheme."

During the meeting, Ms Sitharaman impressed upon the lenders that as and when the moratorium on loan repayment is lifted, borrowers must be given support. She said COVID-19 related distress must not impact the lenders' assessment of their creditworthiness.

Finance Minister also focused on:

Lenders immediately putting in place Board-approved policy for resolution, identifying eligible borrowers and reaching out to them.

Quick implementation of a sustained resolution plan by lenders for the revival of every viable business.

The Finance Minister also emphasised that resolution schemes must be rolled out by lenders by September 15, 2020, and a sustained media campaign to create awareness be carried out. She advised lenders to ensure that regularly FAQs on the resolution framework are uploaded on their websites in Hindi, English and regional languages, and also circulated to their offices and branches.

The lenders assured that they are ready with their resolution policies, and they will comply with the timelines stipulated by the Reserve Bank of India. They said that they have started the process of identifying and reaching out to eligible borrowers.

The Ministry of Finance has also been engaging with RBI to ensure that the lenders are assisted by RBI in the resolution process.

The Finance Minister also reviewed the progress made by various lenders under ECLGS, PCGS 2.0 and Sub-ordinate Debt Schemes announced as part of the 'Aatmnirbhar Bharat Abhiyaan', and advised lenders to try and extend the maximum possible relief to borrowers before the festive season.

An amount of Rs. 1.58 lakh crore has been sanctioned as on August 31, 2020, under ECLGS, out of which more than Rs. 1.11 lakh crore has also been disbursed. Under PCGS 2.0, Bonds/CPs of Rs 25,055.5 crore have been approved for purchase by Public Sector Banks so far, out of which Rs 13,318.5 crore amounting to more than 53% of the portfolio pertains to Bonds/CPs rated below AA-. The Scheme has thus been a crucial intervention for lower-rated Bonds/CPs.

Besides, the Finance Minister appreciated the efforts of banks and NBFCs during the lockdown in implementation of the Pradhan Mantri Garib Kalyan Yojana and the Aatmnirbhar Bharat related measures. The Finance Minister also exhorted the lenders to proactively respond to needs of companies and businesses, as well as those of individual borrowers, and to spearhead the efforts for rebuilding businesses desperate for help owing to COVID-19 related distress.