"Ultimately, it is the depositors' money. The number of depositors could run into crores whereas the number of borrowers could be in lakhs. There are small depositors, there are middle class depositors, there are retired people who depend on bank deposits. So the interest of depositors had to be protected while allowing restructuring," Das said

"Also the aspect of financial stability of the banking system needs to be kept in mind because banking has an important role to spur economic development especially in an emerging market like India. So on the one hand we had to ensure stability of the banks as we remember that a few years ago the NPA levels of banks had gone up steeply, and on the other hand we had to keep in mind that there are a large number of businesses who availed loans from banks have been adversely affected by covid-19," Das added.

The RBI governor emphasised on enabling the viable businesses to come back to normalcy and resume their activities. "Revival of businesses will also ensure that the bank's NPA levels are kept in check and there is a quicker economic recovery. That's why we have created a committee of eminent personalities led by K V Kamath to study these aspects and make recommendations. They have come up with certain recommendations within 30 days," said Das.

The spreads across all grades of bonds have come down over the last 3-4 months, the RBI governor said. The reduction in the spreads for AAA rated companies could be more and in comparison to BBB or BBB- rated firms, due to the risk perception of the investor, he added.

Nonetheless, the liquidity measures taken by the RBI have reduced the borrowing cost even for the lowest grade bonds over the last few months.

MG George Muthoot, chairman of Muthoot Finance, that engages in gold loan business, expressed concerns over difficulties being faced by NBFCs in the gold loan business due to RBI norms with regards to loan to value ratio.

Citing the example of IL&FS crisis, Das explained the rationale behind these norms for NBFCs.

"We had the unfortunate incident of the IL&FS crisis. Right from the beginning since January 2019, we have slowly been bringing in new regulations to govern the NBFC sector. We do not want a repeat of the crisis at another NBFC. We have been intensively and rigorously monitoring the top 100 NBFCs to maintain stability of the sector," Das said.

For NBFCs that give gold loans we have consciously kept the loan to value ratio at 70%, Das said. Since, the entire business of such NBFCs is driven by gold loans, any sort of volatility can completely undermine them, he added. “Whereas for banks, gold loans are only a small fraction of their total lending portfolio. We have to maintain financial sector stability and we cannot afford another crisis in the NBFC sector."

"Covid-19 has changed our lives. It is increasingly clear that our lives will never be the same again," said RBIgovernor.

In March, RBI introduced the loan moratorium to provide relief to borrowers and enable continuity of viable businesses impacted by covid-19 pandemic. The central bank had initially allowed moratorium for the three months ended 31 May but later extended it till end-August.