Tourism Current Affairs - 2020
The Reserve Bank of India has constituted a panel under former ICICI bank CEO K V Kamath. The panel will make recommendations on financial parameters that are to be considered to structure loans that are impacted by COVID-19.
About the committee
The Committee will recommend financial parameters that are required to be factored in the resolution plans. Basically, the committee is to suggest parameters that will help in resolution of COVID-19 related stressed assets. The five-member committee will make recommendations on required financial parameters. It will recommend sector-specific benchmark ranges for such parameters in each resolution plan for borrowers with an aggregate exposure of Rs 1,500 crores or above. Also, the panel will focus on three most adversely affected sectors due to the pandemic namely Tourism and Hospitality, aviation, construction and real estate.
The restructuring of the loans is to be done based on Prudential Framework that was issued in 2019.
The Prudential Framework for Resolution of Stressed Assets, 2019 provides principle-based resolution framework to address borrower defaults under normal scenario. Default means non payment of debt when the part or whole installment of the debt has become due and payable and the debtor has not yet paid.
Benefits and concerns of Restructuring
The restructuring of loans is expected to relieve the companies serving loan obligations on time. However, the companies that were already in default for more than 30 days cannot avail the facility.
Previous Loan Restructuring Schemes of RBI
- Corporate Debt Restructuring Scheme: It was discontinued since 2015 as the corporate misused debts recast plans in connivance with some banks.
- Strategic Debt Restructuring Scheme: Under the scheme, the banks were given the opportunity of converting loan amount into 51% of equity that was sold to the highest bidder. However, the scheme failed to help the banks due to viability issues. Only two sales were possible under the scheme
- S4A Scheme: S4A scheme is Sustainable Structuring of Stressed Assets scheme.
- Asset Reconstruction Scheme
- Insolvency and Bankruptcy Code
Tags: Aviation • Bad loans • Construction sector • Hospitality Sector • ICICI
The United Nations recently has warned of “hunger pandemic” due to COVId-19. Apart from COVID-19, the other factors that are to contribute to the crisis include wars in Syria, crisis in Lebanon and desert locusts destroying crops in East Africa.
The COVID-19 outbreak according to the organization is to starve more than 130 million people. Also, the poor will be hit hard due to the decline in exports, tourism and collapse in oil prices. Also, there is a huge decline in foreign aid.
The UN says that around 300,000 people are expected to lose their lives due to lack of food for a period of three months.
Need of the moment
The World Food Programme is currently in need of 1.9 billion USD in order to stockpile food in countries that are at risk of starving. If not addressed, there are possibilities of severe famines.
World Food Programme
The WFP is the food assistance branch of United Nations. It is the largest humanitarian organization that addresses hunger and promotes food security. It works to eradicate hunger and malnutrition. It was established in 1961.
The following are the objectives of WFP
- To save lives during emergencies and protect livelihood
- To support nutrition and food security to build livelihood in fragile regions of the world
- To help countries in becoming self sufficient
- To reduce inter-generational cycle of hunger
- To achieve Zero-Hunger by 2030.