Executives from various private sector banks expressed concerns about the impact on asset quality amid the second wave of coronavirus caused by disruption during their recent meeting with the Reserve Bank of India, according to two people at the Bank of India. current.

One of the private banking chiefs present at the meeting said the banks had asked the RBI to extend the window for one-off restructuring loans under Resolution 1.0 Framework at least until September to allow them to relieve more borrowers. CNBC-TV18 previously reported that public sector banks requested similar relief when meeting with RBI. While banks had cited restructuring of more than 300 corporate accounts in December 2020, barely 70 had been implemented as of March 31, banks had already informed RBI. Now, with the second wave and the disruption in the activities of borrowers whose balance sheets are already weak, banks want the restructuring window to remain open.

In an interview with CNBC-TV18, Kotak Mahindra Bank Managing Director and CEO Uday Kotak noted that banks must “grow up and start acting like adults,” and not keep waiting on the government or the government. regulator that they retain them. “Banks have to be prepared to take the hit on their capital when they undertake restructuring,” he said. Kotak said he was not in favor of back-to-back abstention, “India’s financial sector needs to stand up. Expecting constant tolerance and spreading and pretending is not healthy. . This will not only weaken the stability of the financial sector in India, but also in the eyes of global investors, “he noted. Kotak, however, appears to be in the minority among his peers, who have sought to restructure the relief of the debt. regulator.

The RBI Governor held a meeting with the CEOs of some private sector banks on Tuesday, as well as Deputy Governors MK Jain, Michael Patra, Mr. Rajeshwar Rao and T Rabi Sankar. In a statement following the meeting, the RBI said the governor recognizes the crucial role played by private sector banks as important stakeholders in the Indian banking sector. “He urged banks to quickly and quickly implement the measures announced by RBI on May 5, 2021, for good. He has also advised banks to ensure continuity in the provision of various financial services, including credit facilities to individuals and businesses in the face of the challenges posed by the pandemic. He also urged them to continue to focus on efforts to further strengthen their balance sheets in a proactive manner, ”the statement read.

While state-owned banks did not call for a moratorium on borrowers during their meeting with RBI, a handful of private banks have raised the issue, one of the people quoted earlier said.

“Some want a limited window for the moratorium, perhaps the RBI could allow a similar moratorium as last year on repayments due between April and June, when the disruption is likely to be the most significant.” , said a person present at the meeting.

The meeting also saw discussions on the assessment of the current economic situation and the state of the banking sector, credit flows to different segments of the economy, especially small borrowers, MSMEs, etc., progress in implementing the Covid 1.0 resolution framework, RBI said.

The monetary policy transmission and liquidity scenario, as well as the implementation of various Covid-related policy measures taken by the RBI were also on the agenda.

Meanwhile, various relief already provided by the RBI on May 5 are expected to limit the increase in bad loans, including restructuring of individual borrowers and MSMEs. In addition, the transfer of loans to the National Asset Reconstruction Company, when it occurs, should also help banks clean up their balance sheets.