SEBI Relaxes Default Recognition Norms For Covid-Related Debt Restructuring
India’s capital markets regulator has asked credit rating agencies to not consider debt restructuring due to Covid-19 as default.
The Securities and Exchange Board of India on Monday asked credit rating agencies not to consider as default the restructuring of debt done solely due to Covid-19 related stress by lenders.
The move comes after the Reserve Bank of India provided a loan restructuring window for corporates following bankers' and industry's demand.
As per RBI, restructuring will be allowed as per the prudential framework issued on June 7, 2019.
"Based on its assessment, if the credit rating agency is of the view that the restructuring by the lenders/ investors is solely due to Covid-19 related stress or under the... RBI framework, CRAs may not consider the same as a default event and/or recognize default," Sebi said in a circular.
It further said appropriate disclosures in this regard will be made in a press release.
SEBI said such relaxation is extended till Dec. 31, 2020.
In March, SEBI had asked CRAs not to consider as default any delay in payment of interest or principal loan amount arisen solely due to the nationwide lockdown.