Banks will begin assessing rescheduling and restructuring of loans worth about Rs 32,000 crore to industries, small and medium enterprises and retail entities in the flood-ravaged Jammu & Kashmir (J&K). A senior public sector banker said work on this would commence in Jammu and Srinagar on Monday, as water had receded from many areas and many bank branches had resumed operations.
The Indian Bank’s Association will assist banks in this regard.
For loans that were standard till the time floods hit the state, the terms might be reworked, the bank executive said.
The J&K government has urged the Centre to direct banks and financial institutions to re-schedule loans/grant moratorium and grant remission of interest for the moratorium period. It has also sought a provision to give fresh loans for the flood-affected, besides waiving loans for individuals, subject to meeting certain norms.
According to Reserve Bank of India (RBI) guidelines, lenders can restructure loans to those affected by natural calamities, as their ability to repay is severely impaired. In all cases of restructuring, RBI has suggested banks consider a moratorium of at least a year. Also, lenders have been asked not to insist on additional collateral security for such restructured loans.
“Asset classification for (such) restructured loans will remain the same as prevalent at the time of restructuring for a period of a year, according to the extant guidelines for restructured loans,” RBI had said in its July 1 circular detailing the guidelines for relief measures by banks in areas hit by natural calamities.