The Reserve Bank of India on Thursday decided to keep interest rates unchanged, forecast negative real GDP growth for the year and braced for elevated inflation in the second quarter.
The RBI signalled that there would be no extension of the loan moratorium regime beyond August 31 but decided to put in place a loan resolution mechanism with some tough conditions to address concerns within the banking sector over a looming bad loan crisis.
A committee headed by banking doyen K.V. Kamath will recommend the financial parameters and relevant thresholds that will be factored into the resolution plans, Das said.
Eligible corporate borrowers and individuals who have taken personal loans will be able to invoke the resolution plan at any time till December 31 but must implement it within 180 days.
The priority sector lending guidelines will be rejigged to remove regional disparities in the flow of credit while the ambit of the programme is being widened to cover start-ups.
Borrowers who pledge gold ornaments with banks and non-banking finance entities will be entitled to get higher loans as the loan-to-value ratio is being raised to 90 per cent from 75 per cent earlier.