RBI has released recommendations by the KV Kamath committee on restructuring loans for borrowers from sectors hit hard by the coronavirus pandemic. The report listed specific financial parameters for 26 sectors, including auto, aviation, construction, hospitality, power, real estate and tourism, among others, that can be factored in by lenders while finalising resolution plan for borrowers. The recommendations have been broadly accepted, the central bank said in a statement on Monday.
"The Committee has since submitted its report to the Reserve Bank on September 4, 2020... The Committee has recommended financial parameters that, inter alia, include aspects related to leverage, liquidity and debt serviceability. The Committee has recommended financial ratios for 26 sectors which could be factored by lending institutions while finalizing a resolution plan for a borrower," the RBI said.
The expert committee was formed under the former ICICI Bank CEO KV Kamath last month to chalk out financial parameters that banks need to consider while working on resolution plans. These factors include total outside liabilities or adjusted tangible net worth, total debt or EBIDTA, and debt service coverage ratio.