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K V Kamath Committee

K.V. Kamath Committee

Context:

The Reserve Bank of India (RBI) has constituted a committee under the chairmanship of K.V. Kamath to make recommendations on norms for the resolution of COVID-19 related stressed loans.

Details:

  • The committee will submit its recommendations on the financial parameters to the RBI, which in turn, will notify the same along with modifications, if any, in 30 days.
  • The Indian Banks’ Association (IBA) will function as the secretariat to the committee and the committee will be fully empowered to consult or invite any person it deems fit.
  • The committee may devise its own procedures for its internal functioning.
  • Recently, RBI announced a ‘Resolution Framework for Covid19-related Stress’ as a special window under the prudential framework on the resolution of stressed assets issued on June 7, 2019.
  • The expert committee shall also undertake the process validation for the resolution plans to be implemented under this framework, without going into the commercial aspects, in respect of all accounts with aggregate exposure of RS1,500 crores and above at the time of invocation.
  • The resolution framework inter alia envisages the constitution of an expert committee by the RBI to make recommendations on the required financial parameters to be factored in the resolution plans, with sector-specific benchmark ranges for such parameters.
    • Stressed assets = NPAs + Restructured loans + Written off assets
    • Non Performing Assets:  A loan whose interest and/or installment of the principal have remained ‘overdue ‘ (not paid) for a period of 90 days is considered as NPA.

Indian Banks' Association (IBA):

  • It was formed in 1946 as a representative body of management of banking in India
  • In 1946 IBA represented 22 banks, IBA currently represents 237 banking companies operating in India.
  • IBA was formed for coordination, strengthening, and development of Indian banking, and assist the member banks in the implementation of new systems and adoption of standards among the members.
  • IBA is managed by a managing committee consists of one chairman, 3 deputy chairmen, 1 honorary secretary, and 26 members.

Source: The Hindu