The RBI Governor has issued a statement announcing additional measures against the backdrop of the extension of the lockdown and a deteriorating outlook for economic activity, under four categories:
In view of the extension of the lockdown and continuing disruptions the following measures announced by the RBI on 27 March and April 17 2020 are being extended by another three months from June 1, 2020 till August 31, 2020, taking the total period of applicability of the measures to six months i.e. from March 1, 2020 to August 31, 2020:
The lending institutions are being permitted to restore the margins for working capital to their original levels by March 31, 2021. Similarly, the measures pertaining to reassessment of working capital cycle are being extended up to March 31, 2021.
Additionally, lending institutions are permitted to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. March 1, 2020 up to August 31, 2020) into a funded interest term loan which shall be fully repaid during the course of the current financial year, ending March 31, 2021.
In view of the current difficulty in raising resources from capital markets, the group exposure limit of banks is being increased from 25 per cent to 30 per cent of eligible capital base, for enabling corporates to meet their funding requirements from banks. The increased limit will be applicable up to June 30, 2021.
Relaxation of guidelines for Consolidated Sinking Fund (CSF) of State Governments.
To refer to the RBI Governor’s statement dated 22 May 2020, click here.
This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
The Bar Council of India does not permit solicitation of work and advertising by legal practitioners and advocates. By accessing the Shardul Amarchand Mangaldas & Co. website (our website), the user acknowledges that: