Indian Economy New measures to restructure loans by banks a 'durable' resolution says RBI Governor
Mumbai/IBNS: Ahead of the expiry of the six-month loan repayment freeze on August 31, Reserve Bank of India Governor Shakti Kanta Das in an interview to CNBC Awaz said the new measures introduced to enable the banks to restructure loans will provide a "durable" resolution to the businesses constrained for money due to Covid-19, save jobs and in turn revive the economy, said a Bloomberg report.
Amid fears that there could be a spike in bad loans after the loan moratorium period ended on August 31 with most businesses scrambling for survival, Das said it was a temporary measure to help businesses and not a permanent fix.
The government is looking to support the economy hit hard by the coronavirus situation while maintaining the stability of the financial sector where bad debt is set to surge to a two-decade high.
Indian banks were struggling with bad loans even before the pandemic and the coronavirus situation has only worsened the problem.
Indian economy is also set for its first annual contraction in four decades while banks are struggling to boost credit growth in a bid to revive the economy.
Details of the criteria for availing relief under the new set of measures will be revealed on September 6, the RBI chief said.
Exuding confidence in the series of measures adopted, Das said the Indian economy will emerge victorious in this war against coronavirus.
Meanwhile, the benchmark of banking shares on the National Stock Exchange - Nifty Bank index -rose 2.38 per cent or 531 points to spike to an intraday high of 22,830.85 after the RBI governor's interview.
According to media reports, the 10 out of 12 shares traded higher led by Kotak Mahindra Bank's 4 per cent gain while Bandhan Bank, ICIC Bank, HDFC Bank, IndusInd Bank, IDFC First Bank and State Bank of India increased by 1 to 3 per cent.
Nifty PSU Bank index remained neutral with five stocks advancing, one unchanged and six declining.
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