This 2-hour Workshop will address two immediate concerns of the financial sector.

Putting an end to an almost ten months-long legal scuffle that started with the plea for a complete waiver of interest but edged towards waiver of interest on interest, the Supreme Court of India on March 23, 2021, had given its judgment in the matter of Small Scale Industrial Manufacturers Association vs UOI & Ors. and other connected matters. Following the judgment, the RBI issued a circular dated April 07, 2021, directing lending institutions to abide by SC judgment. Further, the IBA in consultation with banks, NBFCs, FICCI, ICAI, and other stakeholders, formulated guidelines for a uniform methodology for a refund of interest on interest/compound interest/penal interest.

Accordingly, financial institutions (including all commercial banks, Co-operative Banks- Urban Co-operative Banks, State Co-operative Banks, and District Co-operative Bank, All India Financial Institutions, NBFCs, HFCs) are required to compute the amount of compound interest for any missing payments during the moratorium period (March to August 2020), replace the same with simple interest at the contractual rate, and refund the same to the borrower/adjust the same with the current receivables due from the borrower. While financial institutions are close to finalising their financial statements and have started doing the computations and refund/adjustment of interest on interest, many open-ended concerns still linger.

Further, the RBI Governor on May 5, 2021 announced the second round of one-time restructuring framework (‘Restructuring 2.0’), which is an extension of the earlier Restructuring 1.0 Framework announced on August 6, 2020. This framework will enable financial institutions to provide a one-time restructuring benefit to the accounts undergoing stress due to the second wave of COVID-19 disruption. There are 2 separate notifications – one dealing with the restructuring of loans to Individuals and Small Businesses and the other dealing with the restructuring of loans to MSMEs. Interestingly, there are subtle differences between the two.

While the financial sector is under obvious stress due to mounting NPAs, both of these immediate actionables become very significant.

We intend to discuss the intricacies of the interest on interest relief and the Restructuring 2.0 Framework in this workshop.

Date: May 21, 2021, Friday

Time: 5 to 7 PM 

Where: On Zoom or a similar platform

Faculty: Mr. Vinod Kothari

Whether interactive?

Yes. Participants may post queries, either in advance or at the time of the workshop. Participants may, based on feasibility, also be allowed to speak.

Fees: The fees for the workshop shall be INR 2000 per participant exclusive of GST.  GST invoices will be issued after the meeting to such participants who need the same. (Participants need to make a request for the same by dropping a mail to

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What will be covered in the workshop?

Refund/Adjustment of Interest on Interest:

  • Background of the Compound Interest Relief; SC ruling, RBI and IBA circulars and legal applicability, and the burning question: who takes the burden?
  • Scope of the relief – which all lending entities are covered, and who all are eligible to get the relief? 
  • Types of lending facilities covered. 
  • Will the relief be applicable for customers who have paid through the moratorium period?
  • Computation of the relief
  • Manner of giving the relief – adjustment against coming EMI, adjustment against any dues currently payable, adjustment against outstanding principal, etc
  • Applicability to penalties, overdue charges and other extras
  • Provision for the Relief in financial statements of FY 20-21
  • Technology issues 
  • Actionables in terms of board policies, etc

Restructuring 2.0:

  • Applicability and scope of as well as the salient differences between of the two separate notifications – 
    • Notification no RBI/2021-22/31 DOR.STR.REC.11/21.04.048/2021-22 and
    • RBI/2021-22/32 DOR.STR.REC.12/21.04.048/2021-22 
  • Eligibility for restructuring under either.
  • Invocation of Resolution plan and implementation.
  • Asset classification and provisioning requirements post-restructuring. Whether assets that have become NPA from 1st April till the date of the invocation are covered?
  • Actionables in terms of policies, disclosures etc.

 Knowledge Resources: