PSBs to implement a uniform process for loan recast

Mumbai: Unlike last year, public sector banks will follow a standard operating procedure this time while identifying and sanctioning loans to be restructured for micro, small and medium enterprises and individuals.The template for restructuring has been finalised on the insistence of the Union government, which wanted faster approvals and a quicker process for all state-owned lenders, people familiar with the matter said.“Last year, the government received a lot of complaints from customers on delays and deficiencies involving public sector banks. Different PSBs had different procedures and service levels. To ensure all banks are equally proactive, it was decided that a single template will be used to invoke restructuring for these loans,” said a person familiar with the decision.The mechanism was developed after consultations by a six-member committee headed by State Bank of India managing director CS Setty that included executive directors of other PSBs.The restructuring template announced by PSBs on Sunday divides loans into three categories — up to Rs 10 lakh, above Rs 10 lakh to Rs 10 crore and above Rs 10 crore.“Loans up to Rs 10 lakh, which cover mostly individuals, will follow a standard pattern across all PSBs. The process is similar for loans above Rs 10 lakh too but banks have been allowed some tweaks according to their own policy for loans of larger size,” said Rajkiran Rai, chairman of Indian Banks’ Association, which has brought PSBs under one umbrella for implementing this.“This templated approach will help banks to streamline their offerings and help the small banks to benefit from the processes and service standards of the larger PSBs. We are working on the number of accounts which will be offered this facility, which will be clear in a couple of days,” said SBI chairman Dinesh Kumar Khara.The Reserve Bank of India opened a second window for restructuring loans of MSMEs and individuals on May 5 under which banks could extend repayment tenors to up to two years for loans aggregating Rs 25 crore or less.The new window is open to individuals and MSMEs that did not avail of the restructuring last year and for loans that were not classified as non-performing assets as of March 31, 2021.

from Economic Times https://ift.tt/2RWeUMM