Christ Yoder
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The Reserve Bank of India has informed the Supreme Court that borrowers opting to resolve stressed COVID-related loans will not be required to submit specific plans. The RBI said borrowers can invoke the resolution framework by submitting a request to lending institutions.
The Reserve Bank of India has informed the Supreme Court that borrowers opting to resolve stressed COVID-related loans will not be required to submit specific plans.
RBI said borrowers can invoke the resolution framework by submitting a request to lending institutions.
The resolution framework does not require that a resolution plan, in any form, be submitted to credit institutions at the time of the invocation request. Instead, for the invocation, borrowers are required to simply submit an application to lending institutions to be considered as part of the resolution.
– RBI told the Supreme Court
Previously, India’s central bank announced a resolution framework to ease the financial strains entities face due to the disruption to business activities due to the coronavirus pandemic.
In this context, RBI told the Supreme Court that the specific contours of the resolution plan to be implemented can be decided by credit institutions, in consultation with the borrower.
“Subsequently, credit institutions will take a decision in principle – in accordance with their policy approved by the board of directors – on invoking the resolution framework. After this invocation, the specific outlines of the resolution plan to be implemented implementation can be decided by credit institutions, in consultation While for personal loans, the resolution plan must be implemented within 90 days from the date of invocation, for all other loans, a period of 180 days from the date of invocation has been prescribed ”, The RBI Supplementary Affidavit reads.
Senior lawyer VV Giri appeared for the Reserve Bank of India on the final day, arguing that the precautionary framework was available in terms of circulars from the RBI.
He argued today that the discretion to develop a resolution plan should rest with the bank, not the borrower.
On December 8, the Center told the Supreme Court that rolling out interest waivers would mean a huge waiver would be obtained, which in turn would affect the economy. “If the banks were to bear this burden, it would necessarily destroy a substantial and major part of their wealth, rendering most of the banks non-viable and seriously jeopardizing their very survival”, SG said while stating that a blanket interest waiver would mean giving up about 6 lac crore.
Judge Bhushan told him at this point that the courts are aware of this and will not pass any order that will shake the economy.
The bench led by Judge Ashok Bhushan should continue to hear the plea to extend the moratorium on loans induced by Covid19.
Read the thread on what happened at court at December 9.
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