NEW DELHI: Reserve Bank of India (RBI) governor Shaktikanta Das on Tuesday advised private sector bank chiefs to ensure continuity in provision of various financial services including credit facilities to
individuals and businesses in the face of disruptions brought on by the Covid-19 pandemic. Das also called on them to implement the measures announced by the RBI on May 5.
“The governor recognised the crucial role played by the private sector banks as important stakeholders in the Indian banking sector. He impressed upon the banks to quickly and swiftly implement the measures announced by RBI on May 5, 2021, in right earnest,” the RBI said. Governor Das also urged banks to keep focussing on efforts to strengthen their balance sheets proactively.
The central bank has held several meetings with financial institutions in the last two months to gauge the impact of the second Covid wave on bank balance sheets. In line with the potential disruption in businesses and loss of livelihoods, the banking regulator recently introduced a recast scheme for borrowers with loans of up to Rs 25 crore.
Banks, however, have sought more relief, citing concerns of a larger hit to asset quality amid the rising infections. “The business outlook was far worse than initially anticipated. The loss of lives has added to the complexities. Collection efficiency is facing a serious challenge as banks are working with just 15-20 per cent capacity, keeping in view the safety of field staff.
We have requested the RBI to allow reassessment of working capital limit for all loans,” an official with state-run lender said. Banks need to complete the recast plans under Resolution 1.0 by June 2021. Sources say that banks have also asked RBI permission to restructure those MSME and education sector loans that have been restructured before.