The RBI has called on the SC to suspend the NPA split; And no compound interest opposes the exemption government
|The RBI has Called on to SC to Suspend NPA Split|
New Delhi: To ensure that the banking system is not affected, the RBI has asked the Supreme Court not to reduce its regulatory order and to suspend the NPA classification.
Opposing any extension of the loan suspension order, the RBI has filed an affidavit in the apex court that the big borrower referred to the Kamat Committee’s recommendation on debt restructuring. The case will be heard in court on October 13.
The RBI noted the ability of individual banks to make their own decisions on the extension of loan suspensions, which would enable banks to make transparent decisions on the eligibility of customers for suspension schemes.
Opposing the RBI extending the loan moratorium for more than 6 months, they claim that long-term borrowers will be affected by the loan behavior and the risk of loss may increase once the schedule payments resume.
The RBI said that policy decisions need to be a key element in financial stability and economic growth of the country and assured that banks, depositors, borrowers and real sector entities take a balanced approach in their interests. The RBI has told the court that every regulatory endeavor has its trade closed due to adverse incentives and unintended consequences.
The recommendations of the Kamath Committee were originally accepted by the RBI and given a September notice. The RBI is trying to differentiate between the two sectors recognized by the Kamath COMMITTEE by installing separate magnets.
Borrowers in 26 sectors have to meet certain thresholds for 5 key ratios. The committee that the RBI has given is that their sector-specific thresholds are simpler than the financial criteria of general lenders.
To plan the solution, the RBI has proposed to take into account the previous financial performance of the borrowers and evaluate the cash flow in the following years.
After proposing a compound interest waiver for loans up to Rs 2 crore, the Center opposes further interest waivers for certain types of borrowers.
Maintaining its correct vision in the revenue policy, the Center submitted that it was decided to waive compound interest during the epidemic to help sensitive borrowers.
Referring to the sector-specific epidemiological packages already provided by the RBI and the central government, the Center has told the court that decisions on expenditure commitments should be taken on a well-set basis.