Lenders must not use coronavirus ( COVID-19 ) related distress as a factor to determine borrowers’ creditworthiness, Union Finance Minister Nirmala Sitharaman told top bankers on Thursday. She directed them to roll out loan resolution schemes by September 15, aiming to maximise relief before the start of the festive season, according to a Finance Ministry statement.
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Ms. Sitharaman’s meeting via video-conference with the heads of commercial banks and non-banking financial companies was aimed at reviewing their state of preparedness for implementing the loans resolution framework for
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Last month,
“During the meeting, Smt. Sitharaman impressed upon the lenders that as and when moratorium on loan repayments is lifted, borrowers must be given support and COVID-19 related distress must not impact the lenders’ assessment of their creditworthiness,” said the statement.
The Minister also emphasised that bankers must immediately put in place board-approved policies for resolution, carry out widespread awareness campaigns, identify eligible borrowers and reach out to them, with quick implementation of sustained resolution plans in order to revive every viable business.
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Bankers gave an assurance that they have started the process of identifying eligible borrowers and would comply with the RBI’s time lines, said the statement.
Reviewing the progress made on credit schemes announced as part of the Atmanirbhar package , Ms. Sitharaman advised lenders to try and extend the maximum possible relief to borrowers before the festive season. So far, only 36% or ₹1.11 lakh crore has been disbursed out of the ₹3 lakh crore Emergency Credit Line Guarantee Scheme aimed at medium, small and micro enterprises. A sum of ₹1.58 lakh crore has been sanctioned so far.