The Reserve Bank of India (RBI) on September 07, 2020 has issued a circular for resolution framework for COVID-19 related stress- financial parameters. All the lending institutions shall mandatorily adhere to the key ratios while finalising eligible borrowers.
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The following guidelines have been given:
• Lending institutions have the right to consider other financial parameters while providing the finalisation of the resolution of the eligible borrowers apart from the stated key ratios.
• The ratios that have been given shall be considered while considering eligible borrowers. However, the performance of the borrowers shall be based on before COVID financial standing.
• Graded approach shall be adopted by the lending institutions which shall show the impact of financial meltdown on the borrowers as well.
• The ratio shall be maintained by the lending institutions till March 31, 2022 and onwards.
• The compliances for the lending ratios shall be monitored on a periodic basis.
• An escrow account shall be held by the lending institutions after the implementation of the resolution plan.
• Compliances shall be assessed by the ICA within 30 days of passing of the application for resolution by the lending institutions.
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