Banks are in talks with the Reserve Bank of India to extend the time required for restructured corporates to meet business benchmarks set under the one-time recast scheme.
"Banks are currently discussing the proposition with the RBI," Rajiv Anand, deputy managing director at Axis Bank Ltd., told reporters on the sidelines of an event. Axis Bank does not see the need for such an extension for its own restructured loans, he said.
The first Covid restructuring scheme, announced in August 2020, allowed banks to recast corporate loans, along with a two-year moratorium. The conditions for large corporates required them to meet financial benchmarks set for 27 stressed sectors, as recommended by the KV Kamath committee.
If the companies are not able to meet these financial benchmarks within the stipulated time, the restructuring plan would fail and the loans would be classified as non-performing assets.
When the scheme was first announced, companies had to meet these benchmarks by March 2022. However, citing the severity of the second Covid-19 wave, the RBI had later extended this deadline to October 2022.
On Tuesday, the Economic Times first reported that banks have sought time till March 2023 for meeting these benchmarks, citing slower-than-anticipated recovery in some sectors and the risks posed by the Omicron variant of the coronavirus.
Only a handful of large companies such as firms from the Future Group and the Shapoorji Pallonji Group had seen their debt restructured under the one-time restructuring scheme.
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