The Reserve Bank of India told the Supreme Court on 12 December 2020 that borrowers opting for resolution of COVID-related stressed loans are not required to submit any specific plans. In FAQs on Resolution Framework for COVID-19 related stress, the RBI said that borrowers can invoke the resolution framework by merely submitting a request to the lending institutions.
The Reserve Bank had announced a resolution framework to help the entities facing financial stress on account of disruption in normal business activity on account of coronavirus pandemic.
When asked the specific question to the RBI “Does invocation under the Resolution Framework require the borrowers to submit any specific resolution plan and the lenders to agree on implementation of the same before December 31, 2020?" RBI submitted "Resolution Framework does not require any resolution plan in any form to be submitted to the lending institutions at the time of request for invocation. Rather, for invocation, the borrowers are required to merely submit a request to the lending institutions for being considered under the Resolution Framework. Thereafter, the lending institutions will take an in-principle decision – as per their Board approved policy – on invoking the Resolution Framework."
RBI has stated that after the invocation of the Resolution Framework, the specific contours of the resolution plan to be implemented will be decided by the lending institutions, in consultation with the borrower.
It further said that for personal loans the resolution plan is to be implemented within 90 days from the date of invocation, while for all other loans a period of 180 days from the date of invocation has been prescribed.