Page 511 - ES 2020-21_Volume-1-2 [28-01-21]

138 Economic Survey 2020-21 Volume 1

Fig 13(b): Yield on AAA rated corporate bonds

Source: CMIE

Box 1:Regulatory Measures in Banking Sector

Commercial Banks
a. Merger of PSBs: Consolidation among another 10 PSBs, with Punjab National Bank,
Canara Bank, Union Bank of India and Indian Bank as anchor banks came into effect
from April 1, 2020.

b. Restructuring of MSME loans: A one-time restructuring of loans to MSMEs that
were in default but ‘standard’ as on January 1, 2019, was permitted, without an
asset classification downgrade, subject to certain conditions like aggregate exposure
(including non-fund-based facilities) of banks and NBFCs to the borrower not
exceeding `25 crore as on January 1, 2019. The borrowing entity has to be GST-
registered. However, this condition will not apply to MSMEs that are exempt from
GST-registration. The cut-off date of January 1, 2019 was extended to March 1, 2020
to support viable MSME entities on account of the fallout of COVID-19. The banks
are required to implement the restructuring by March 31, 2021.
c. Large exposure framework: A bank’s exposure under the Large Exposure Framework
to a group of connected counterparties was increased from 25 per cent to 30 per cent
of the eligible capital base of the bank. The increased limit will be applicable up to
June 30, 2021.
d. Export Credit: The maximum permissible period of pre-shipment and post-shipment
export credit sanctioned by banks was increased from one year to 15 months for
disbursements made up to July 31, 2020, in line with the relaxation granted in the
period of realization and repatriation of the export proceeds to India.