RBI answers FAQs on Resolution Framework for Covid-19 related stress

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The Reserve Bank of India has answered the FAQs on Resolution Framework for Covid-19 related stress published vide circular dated August 6, 2020:

  • Loans given to farmer households would be eligible for resolution under the Resolution Framework if they do not meet any other conditions for exclusions listed in the Resolution Framework.
  • Apart from the escrow account required to be set up at the legal entity level as required by the Resolution Framework, there is no prohibition in setting up additional separate escrow accounts at each project level, if the lenders desire so. Only in respect of borrowers belonging to real estate sector, and have both residential and commercial real estate business, the prescribed thresholds for the financial parameters may be applied at the project level.
  • For the borrowers eligible for resolution under the circular dated August 6, 2020 on Resolution Framework for COVID-19-related Stress, the circular dated August 6, 2020 will be applicable if a resolution process under the circular is invoked. For all other borrowers, the extant instructions as otherwise applicable shall still be in force.
  • The Resolution Framework may be invoked for resolution of all exposures of lending institutions to eligible borrowers, including investment exposures.

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