Resolution Framework Guidelines by RBI & Expert Committee Report

In this report Mukesh Mohan Gupta has explained everything about the latest circular of Reserve Bank of India on Resolution Framework of all borrower accounts other than MSME and Personal Loans. To get assistance of Chamber of Indian Micro Small…

Resolution Framework Guidelines by RBI & Expert Committee Report

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In this report Mukesh Mohan Gupta has explained everything about the latest circular of Reserve Bank of India on Resolution Framework of all borrower accounts other than MSME and Personal Loans.

To get assistance of Chamber of Indian Micro Small and Medium Enterprises, please join as member at the below link:

https://www.indiansmechamber.com/bcomememberpay.php

You may submit the details to get expert advice on Resolution / Restructuring of your loan at below link:

https://bit.ly/2RcFn4w

The ELIGIBLE BORROWERS are those having stress on account of Covid-19, which are Standard and with arrears less than 30 days as at March 1, 2020.

The RESOLUTION FRAMEWORK May be invoked not later than December 31, 2020.

The RESOLUTION PLAN need to be implemented within 180 days from the date of invocation.

Resolution Plan will be deemed to be invoked when the Lenders representing 75% by value and 60% by number (Majority Lenders) agree to invoke.

Lenders also need to sign the ICA within 30 days of invocation.

Under the Resolution plan the lenders can approve Restructuring, Regularisation, Change in ownership, Sanction of additional facilities, Conversion of debt into equity etc.

The Residual tenor of the loan may be extended by maximum 2 years with or without payment moratorium.

Independent Credit Evaluation from any Credit Rating Agency will also be required if Aggregate exposures is more than Rs. 100 crores.

An expert committee under the Chairmanship of Mr. K V Kamath was constituted by Reserve Bank of India, which has submitted its report on September 04, 2020.
The committee observed that following sectors are visible to be impacted due to COVID-19:-
Power
Construction
Iron & Steel Manufacturing
Roads
Real Estate
Trading-Wholesale
Textiles
Chemicals
Consumer Durables/FMCG
Non-ferrous Metals
Pharmaceuticals Manufacturing
Logistics
Gems & Jewellery
Cement
Auto Components
Hotel, Restaurants, Tourism
Mining
Plastic Products Manufacturing
Automobile Manufacturing
Auto Dealership
Aviation
Sugar
Port & Port services
Shipping
Building Materials
Corporate Retail Outlets

Following Selected parameters have been identified by the expert committee:

• Total Outside Liability / Adjusted Tangible Net Worth
• Total Debt / EBIDTA
• Current Ratio
• Debt Service Coverage Ratio
• Average Debt Service Coverage Ratio

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