The response from the corporate world to the RBI's loan restructuring schemes

Mumbai, Ta. Monday, October 26, 2020

The loan restructuring schemes launched by the Reserve Bank of India (RBI) for borrowers weakened by the Corona are seeing a lukewarm response from the corporate world. Very few people are coming forward to use the schemes from their corporate loan holders, a bank official said.

The standard is not to downgrade or classify the account of the borrower benefiting from this scheme. Not only this, such loans will continue to be known as standard loans.

Companies are worried that their credit rating will be jeopardized if the option of restructuring loans is chosen. We have received five to six inquiries so far and that too has not yet been converted into restructuring, the official added.

The Kamath Committee said in its report that an estimated Rs 12.5 trillion in loans had come under pressure in the banking system after Kovid-15.

Banks take their credit rating or credit score into consideration when it comes to taking out loans from an individual or a company. Ratings are provided to corporate houses by rating agencies.

If a company opts for restructuring, it is only natural that banks may provide its information to rating agencies. For companies with poor credit ratings, it is difficult to raise money from home as well as abroad, an analyst said.

After receiving the applications, the banks have till December 31 to carry out the restructuring plan.