Companies from deeply troubled sectors may find it difficult to meet threshold set by the RBI’s Kamath Committee

While ASSOCHAM welcomes the K V Kamath Panel recommendations providing relief to 26 sectors, many companies in the sectors hit badly would still find it difficult to meet the threshold recommended by the RBI

The guidelines issued by the Reserve Bank of India based on the recommendation of the five-member panel the committee headed by veteran banker- K V Kamath to restructure COVID stressed loan exposures across 26 sectors is a step which would prevent hundreds of businesses from premature closure, stated Dr. Niranjan Hiranandani, president, ASSOCHAM.

“However the situation for many of the worst-hit sectors like hospitality, tourism, and real estate are extremely bad. Unless there is a revival of demand, many companies in these sectors would find it difficult to continue business operations,” He explained. “These sectors are included in the 26 sectors named in the panel. These measures announced would hopefully help in bailing out the stressed sectors and are much welcome,” He informed.

“No doubt, the threshold for five ratios that banks need to monitor while putting a resolution plan for the stressed borrower will bring transparency and efficiency, but the whole gamut depends on the recovery path for each of the sectors,” said Dr. Hiranandani. However, the two years’ time frame to achieve the threshold for all the ratios may not be sufficient for highly stressed companies,” he added.

According to Dr. Hiranandani, a deeper clarity is desired for all the stake-holders like financial institutions and companies for better effect.

He also revealed that while the government and the RBI are doing their bit to help the industry, a bit more needs to be done to revive demand.

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