Life after moratorium, for banks and borrowers

There are enough filters in the Covid-19 loan restructuring scheme to prevent misuse, but is it a tool to delay the growth in banks' bad loans? We will know after two years

In the last week of March, the Reserve Bank of India (RBI) had asked all lending institutions to offer a three-month moratorium to their borrowers, affected by the Covid-19 pandemic, on payment of loan instalments between March and May. Later, the banking regulator extended it by three months, till August.

What’s next? While the moratorium has ended, a new window is being opened for restructuring those loans that the borrowers are unable to service because of their businesses being affected by the pandemic. The loans can be restructured by funding interest, converting part of debt into equity and giving the borrowers