Page 27 - Banking Finance April 2021
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ARTICLE






         RESOLUTION



         FRAMEWORK FOR



         COVID-19 RELATED




         STRESS FOR



         PERSONAL LOANS














         Introduction:                                        on 31 August, 2020. This forbearance of 6 months is being
                                                              made available indiscriminately to all the borrowers, but the
         The Corona Virus pandemic has shattered the dreams of
         millions of Indians. India's economy, which was growing  matter of fact was that it cannot last to all borrowers for
         rapidly, has fallen flat. Tens of millions of people were coming  an indefinite period thereby creating an environment of
         out of poverty, megacities were being erected, India's  uncertainty amongst the said segment.
         strength was increasing and it was poised to become an
         economic superpower. Due to slowdown in the economy  As the process for normalization of economic activity gathers
         which was triggered by the impact of COVID-19 pandemic,  pace, the need to address the deeper cash flow/balance
         some employees had either lost their job or working on  sheet stress that many of the viable entities may have been
         reduced salaries thereby triggering a problem of serving of  exposed to on account of the pandemic and the consequent
         their EMIs.                                          impact on the financial institutions is also required. Though
                                                              the phased unlockdown has started, the severity and
         The RBI in starting of lockdown period due to COVID-19
                                                              continuity of COVID-19 impact is visible in business and
         pandemic had permitted banks to grant a moratorium cum
                                                              economy and normalcy will take some time.
         forbearance of 6 months in deferment of EMIs which ended
                                                              Keeping in consideration of the genuine difficulties facing by
                               About the author               individual borrowers while servicing their EMIs due to

                                                              reducing earning capacity of the salaried as well as self-
                        A. K. Agnihotri                       employed class, the RBI has advised all the lenders to
                        Senior Manager (Faculty)
                        Union Bank of India                   formulate a Resolution Policy for the borrowers impacted
                        Staff College, Bengaluru              by the ongoing precarious COVID-19 pandemic vide its
                                                              Circular dated 06 August, 2020.

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