RBI sets debt revamp rules for pandemic-hit firms

Aid for borrowers: A security guard stands outside a bank branch in New Delhi. India’s central bank had allowed banks to alter the terms of loans for cash-strapped borrowers hit by the fallout of the pandemic. — AFP

MUMBAI: Lenders will have to consider issues such as liquidity and debt-servicing ratios when preparing restructuring plans for loans that have soured due to the coronavirus pandemic, the Reserve Bank of India (RBI) said following recommendations from an external panel.

The central bank identified 26 sectors affected by the pandemic such as auto, aviation and tourism, which can be offered a resolution subject to criteria including debt-coverage ratio, outstanding liabilities and a company’s net worth before the virus.