RBI permits one time restructuring of loans - August 06, 2020

RBI has permitted one time restructuring of loans. Below are the key points relevant for the Borrowers

• Lenders will frame Board approved policies for implementing the viable resolution plans of eligible borrowers under this framework. Lenders will ensure that the resolution under this facility is provided only to the borrowers having stress on account of Covid19. The Board approved policy will provide eligibility criteria of the borrower company, due diligence process and necessity of implementing resolution plan in the borrower company.
• Only those borrower accounts shall be eligible for resolution which were classified as standard and their defaults were not old for more than 30 days with any lending institution as on March 1, 2020. Further, the accounts should continue to remain standard till the date of invocation by the lenders.
• If there are multiple lenders with exposure to the borrower, the resolution process shall be treated as invoked if lenders representing 75 per cent by value of the total outstanding credit facilities (fund based as well non-fund based) and not less than 60 per cent of lenders by number agree to invoke the same.
• In all cases involving multiple lenders, where the resolution process is invoked and consequently a resolution plan has to be implemented, ICA shall be required to be signed by all lenders within 30 days from the date of invocation.
• In cases where the resolution process has been invoked but lenders representing 75% or above by value of the total outstanding credit facilities (fund based as well non-fund based) and at least 60% of lenders by number, do not sign the ICA within 30 days from the invocation, the invocation will be treated as lapsed and framework will not be applicable. 
• Resolution under this framework may be invoked till December 31, 2020 and must be implemented within 180 days from the date of invocation.
• Resolution plans in respect of accounts where the aggregate exposure is ?100 crore and above, shall require an independent credit evaluation (ICE) by any one credit rating agency (CRA) authorized by the RBI.