The Reserve Bank of India (RBI) has allowed all financial lenders (banks, NBFCs etc.) a six month moratorium from 1 March, 2020 to 31 August, 2020 on payment of instalments on all outstanding loans. In other words, the borrowers need not pay the instalments for the loan taken by them for a period of six months as mandated by RBI. Further, after the advent of the corona virus pandemic, banks are seeking a onetime restructuring opportunity for companies whose loans are declared as NPAs, provided their businesses are viable.

While reference to this move, the SBI Chairman has pointed out that one-time restructuring requires deeper analysis to understand the losses incurred by the companies. Currently there are cash flow disruptions and time is not suitable for one-time restructuring. Further, SBI Chairman also believed that there's no right time for restructuring. The moratorium as a measure only takes care of the disruption of cash flow during the lockdown period or partial exit of lockdown. However it would be more prudent to have a systematic assessment of each sector and unit of business. After that the banks will have to engage with entities and assess the impact on individual entities and industry sector to decide on restructuring in view of the different business dynamics and interface with the business eco system based on liquidity positions and competitive capabilities of each promoter /business unit, which may not require an immediate restructuring.

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