Loans not overdue as on Aug 5, 2019 to be considered for restructuring
Big borrowers not eligible
Nishikant Khajuria
JAMMU, Jan 1: In a major relief, the Reserve Bank of India (RBI) has given its nod for rehabilitation benefits to the borrowers across Jammu and Kashmir, who were affected by the recent disturbances in the Union Territory following abrogation of Article 370 and re-organization of the erstwhile State.
The relief involving crores of rupees to the J&K borrowers shall be extended as per the “Master Directions on Relief Measures by the banks in areas affected by natural calamities”, according to which borrowal accounts upto medium enterprises will be eligible for restructuring.
All eligible loans under Master Directions, which are not overdue as on August 5, 2019, may be reckoned for restructuring while old restructured accounts, which are standard and not overdue (restructured only under Master Direction) may be considered only if they are affected by current disturbances, read a communication by the RBI to J&K Bank, Convener of State Level Bankers Committee (SLBC).
While period for completing the restructuring exercise has been extended up to June 30, 2020, big borrowers are not eligible for the rehabilitation benefit.
The major relief to the borrowers is in response to the recommendations made by the J&K SLBC, chaired by the Chief Secretary J&K B V R Subrahmanyam, which was held on September10, 2019 in Srinagar.
“With reference to the notification issued by the Government of J&K, dated October 9, 2019, November 14, 2019 and December 2, 2019, we advise that banks may extend the rehabilitation benefits applicable to the borrowers affected by the disturbances in the State (UT of J&K) as per the Master Directions on Relief Measures by the banks in areas affected by natural calamities,” says the RBI communication to SLBC Convener.
Maintaining that the banks should identify only `genuine borrowers’ affected by the disturbance for the restructuring, the RBI has said that the banks may assess the requirement of the individual borrowers in each case and depending on the nature of his/her account, repayment capacity and need for the fresh loans, appropriate decision shall be taken by the individual banks based on viability.
As per the RBI `Master Directions’, depending on the severity of a natural calamity, SLBC/DDC shall take a view as to whether a general rescheduling of all other loans (besides the agriculture loans) such as loans granted for allied activities, loans to rural artisans, traders, micro/small industrial units or in case of extreme situation, medium enterprises are required. If such a decision is taken, while recovery of all the loans be postponed by the specified period, banks may assess the requirement of the individual borrowers in each case and depending on the nature of his/her account, repayment capacity and the need for fresh loans, appropriate decisions shall be taken by the individual banks.
Meanwhile, Lt Governor UT of J&K, Girish Chandra Murmu has requested for relief of large borrowers on the same lines. Besides, the Government of Jammu and Kashmir has conveyed to the Convener J&K SLBC i.e. J&K Bank, that as part of the Economic Rehabilitation Programme, for a period of one year the J&K Government under its Interest Relief Scheme shall contribute one-third of the monthly installment of the interest payable by the borrowers of all banks operating in the UT of J&K, whose accounts are identified to be eligible for restructuring under RBI’s Master Directions relating to relief measures by Banks in the areas affected by natural calamity subject to the condition that the said borrowers have actually paid the two-thirds of the installment of the accrued monthly interest beforehand.
Notably, the contribution of the Government under the Economic Rehabilitation Programme may run in hundreds of crores.
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