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RBI appeals to SC to allow NPA classification
Why is it in news?
- The RBI has appealed to the country’s top court to let banks classify loans as non-performing.
Details:
- In order to help borrowers weather pandemic-related stress, the RBI has let banks offer a moratorium on loan payments for up to six months and permitted a one-time restructuring of accounts.
- According to RBI, the ban imposed to help borrowers in the COVID-19 pandemic could greatly harm the nation’s financial system.
Background:
- The RBI’s measures ensured that accounts that were standard prior to the implementation of the nationwide lockdown in late March, would not be classified as NPAs.
- However the borrowers have to made use of the moratorium, which allowed repayments to be delayed until the end of August but with the loans continuing to accrue interest.