• The Supreme Court recently asked the Centre and the Reserve Bank of India about the steps taken to implement the K.V. Kamath Committee report on recommendations to bail out sectors affected by the COVID-19 pandemic.



  • Various writ petitions have been filed in the court highlighting the plight of borrowers, small and big, who were being charged compound interest, post the pandemic moratorium which expired on August 31.


When was the committee setup?

  • In August this year, RBI set up a committee headed by K.V. Kamath on restructuring of loans impacted by the Covid-19 pandemic.
  • The Committee was tasked to recommend parameters for one-time restructuring of corporate loans.
  • The Committee will formulate sector-specific resolution plans for all accounts with total loan exposure of Rs. 1,500 crores and above.



  • Graded approach to restructuring of stressed accounts based on severity of the impact on the borrowers- Banks can classify the accounts into mild, moderate and severe as recommended by the committee.
  • Five financial parameters to gauge the health of sectors facing difficulties- total outside liabilities to adjusted tangible networth, total debt to earnings before interest, taxes, depreciation, and amortization (Ebitda), debt service coverage ratio (DSCR), current ratio and average debt service coverage ratio (ADSCR).
  • 26 sectors have been identified including auto, aviation, construction, hospitality, power, real estate and tourism.



  • The committee was to scrutinise restructuring of loans above ₹1500 crore.
  • The resolution under this framework is applicable only to those borrowers who have been impacted on account of Covid.
  • Only those borrowers which were classified as standard and with arrears less than 30 days as at March 1, 2020 are eligible under the Framework.


Why these measures were necessary? How serious is the debt problem?

  • Corporate sector debt worth Rs 15.52 lakh crore has come under stress after Covid-19 hit India, while another Rs 22.20 lakh crore was already under stress before the pandemic.
  • This effectively means Rs 37.72 crore (72% of the banking sector debt to industry) remains under stress.
  • This is almost 37% of the total non-food bank credit.
  • Besides, Companies in sectors such as retail trade, wholesale trade, roads and textiles are facing stress. Sectors that have been under stress pre-Covid include NBFCs, power, steel, real estate and construction.


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