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Addendum to the Guidance Note on Audit of Banks, 2020 Addendum to the Guidance Note on Audit of Banks, 2020 Edition with reference to RBI circular no.: RBI/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20 dated March 27, 2020 on COVID 19 - Regulatory Package The RBI issued a circular dated March 27, 2020 granting relief for borrowers as Covid-19 Regulatory package. The relief granted to borrowers vis-à-vis IRAC norms is as follows: 1. Rescheduling of Payments Term Loans an
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FAQ :
The AASB has issued an addendum to its 2020 Guidance Note on the Audit of Banks.
The addendum references RBI circulars dated March 27, 2020, and April 17, 2020, both concerning the COVID-19 Regulatory Package.
The RBI circulars offered relief such as a moratorium on loan instalments for term loans and deferment of interest on working capital facilities.
The relief measures primarily address term loans and working capital facilities. Other facilities like LCBD and Bill Discounting, as well as the investment portfolio of banks, are not covered by these specific RBI circulars.
The relief granted generally will not result in an asset classification downgrade. However, specific provisioning requirements may apply to term loans and working capital facilities where moratorium or deferment benefits are availed, particularly if the accounts would otherwise have been classified as NPA.
Yes, the addendum addresses RBI's easing of working capital financing, allowing lending institutions to recalculate drawing power by reducing margins or reassessing the working capital cycle for borrowers facing economic stress due to the pandemic.
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