Kamath panel may suggest differentiated recast plan
1 min read . Updated: 04 Sep 2020, 11:00 PM ISTOn 21 August, Mint had reported that many banks have already put in place board-approved policies for restructuring and are awaiting inputs from the Kamath committee
The K.V. Kamath committee preparing the criteria for debt recasts is likely to recommend differentiated restructuring for identified stressed accounts, a banker aware of the matter said. Depending on the vulnerability of the stressed account, banks may be allowed to proceed with a simple or a deep restructuring, the banker said on condition of anonymity.
Economic Times on Friday reported that the committee has identified six problem sectors including aviation, real estate, automobile, infrastructure, and power, and has prepared solutions for 29 out of 307 identified sectors.
The Reserve Bank of India has asked the panel to recommend a list of financial parameters, including leverage, liquidity, and debt serviceability, to decide on the resolution plan. The committee will also vet the resolution plans for all the accounts where the exposure is more than ₹1,500 crore.
On 21 August, Mint had reported that many banks have already put in place board-approved policies for restructuring and are awaiting inputs from the Kamath committee. They have already segregated loans into two buckets, customized and standardized, for quicker resolution. Corporate borrowers will be offered customized solutions because of the complexity of their contracts and involvement of multiple banks. Individual borrowers, on the other hand, will be given a standardized package if they can show substantial loss of income because of covid-19.
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