RBI Extends Deadline To Meet Targets Under One-Time Debt Restructuring
Citing the impact of the second Covid wave, the Reserve Bank of India has eased by six months the deadline to meet four operational parameters under the one-time debt restructuring scheme announced in August 2020.
The parameters include total debt-to-Ebitda ratio, current ratio, debt service coverage ratio and average debt service coverage ratio. The deadline has been extended to Oct. 1, 2022 from March 31, 2022.
"Recognising the adverse impact of second wave of Covid-19 on revival of businesses, and the difficulty it may pose in meeting the operational parameters, it has been decided to defer the target date," the RBI said in its statement of developmental and regulatory policies.
A committee headed by KV Kamath had recommended specific ratios to be met under these parameters for 27 stressed sectors which were affected by the first wave of the Covid-19 pandemic. The suggestions were accepted by the RBI and were to be incorporated by banks while they were implementing resolution plans for corporate accounts under the one-time restructuring scheme.
The ratios prescribed under the total outside liabilities/adjusted total net worth will, however, be required to be met by March 31, 2022, the RBI said, since it was expected to be crystallised upfront as part of the resolution plan.
Under the one-time restructuring scheme, banks have implemented resolution plans for only a handful of large companies as most corporate borrowers stayed away. Those who availed it include the Future Group companies and the Shapoorji Pallonji Group.
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