Not So Bitter Medicine For Covid Blues

The covid-19 pandemic and its subsequent lockdowns have resulted in a steep fall in revenue and income for both individual and corporate borrowers. Reflecting its well-earned reputation as a watchful, if perhaps over-eager regulator, the Reserve Bank of India (RBI) announced measures on 6 August that provide a limited window under its directions of 7 June 2019, for the resolution of loans to individual and corporate borrowers that are stressed due to the covid-19 pandemic.

The 6 August directions allow lenders to resolve loans to individuals that are in the nature of personal loans, that were classified as standard loans as at 1 March, and that are not overdue for a period exceeding 30 days. For this purpose, personal loans are defined as consumer credit, education loans, loans for housing, and loans given for investment in financial assets. Resolutions under the 6 August directions may be invoked up to 31 December. A resolution plan may include rescheduling of