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As of April 23, Delhi has 2,248 cases of COVID-19. After Maharashtra and Gujarat, Delhi has the highest number of cases in the country. On March 22, when the number of cases rose to 29, the Delhi government announced lockdown in the state until March 31, to contain the spread of COVID-19. This has been followed by a nation-wide lockdown by the central government between March 25 and May 3. In this blog, we summarise some of the key measures taken by the state government in response to COVID-19 so far.
Before the lockdown
On March 8, with three cases of COVID-19 in the state, the Department of Health and Family Welfare decided to carry out an awareness drive at various crowded places during Holi. Along with it, the government also took several other steps for mitigating the spread of COVID-19 in the state. Some of these measures are summarised below.
Health Measures
Disinfecting the vehicles: On March 11 and 12, the government ordered to disinfect minibuses, school buses and school cabs daily.
The Delhi Epidemic Diseases, COVID-19 Regulations, 2020: On March 12, with six cases of COVID-19, the Delhi government notified The Delhi Epidemic Diseases, COVID-19 Regulations, 2020. These regulations are valid for a year. Key provisions include:
(i) All government and private hospitals should have dedicated flu corners.
(ii) home quarantine for people who have travelled through the affected areas, and
(iii) Certain persons authorised under the Regulations, with the approval of the State Task Force, can take necessary measures to contain the spread of COVID-19, such as: (i) sealing a geographical area, (ii) restricting the movement of vehicles and people, and (iii) initiating active and passive surveillance of COVID-19 cases.
Movement Restrictions
Educational institutions: On March 12, the government ordered the closure of all educational institutions up to March 31. The students writing examinations were allowed to attend them along with the staff. However, on March 19, the government ordered the postponement of exams until March 31.
Public gatherings:
Restaurants and private establishments: On March 19, all restaurants were ordered to discontinue sitting arrangements until March 31. Private establishments were ordered to allow their employees to work from home till March 31.
Delhi-Kathmandu bus service: On March 20, the government suspended the Delhi-Kathmandu bus service, officially known as the Maitri Bus Sewa.
During the lockdown
On March 22, when the number of cases rose to 29, the Delhi government announced the lockdown in the state until March 31. The lockdown involved: (i) suspending the public transport services, (ii) sealing borders with Haryana and Uttar Pradesh, (iii) suspending all domestic and international flights arriving in Delhi, and (iv) banning the congregation of more than five persons at any public place. This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 3.
Starting from April 20, the central government allowed certain activities in less-affected districts of the country. However, the Delhi government, on April 19, announced that there will not be any relaxation in the lockdown in Delhi, until another comprehensive assessment which will be made on April 27.
Welfare Measures
The Delhi government announced several welfare measures to address the difficulties being faced by people during the lockdown. Key measures include:
Night shelters: The Delhi Urban Shelter Improvement Board is providing free meals to the homeless people staying in the night shelters. On March 25, a hunger helpline was set up which directs the needy people to the nearest night shelter for food.
Hunger Relief Centers: On March 26, the government directed the District Magistrates to set up at least two hunger relief centres in every municipal ward for providing 500 meals twice (lunch and dinner) every day at each centre.
Financial assistance: The government is providing one-time financial assistance of Rs 5,000 to drivers of vehicles such as autos, taxis, and e-rickshaws.
Compensation to family members: The Delhi government will be giving compensation of one crore rupees to the family members of the employees who may die due to COVID-19.
Health Measures
Additional manpower: On March 24, the government ordered the hospitals and institutions under the Department of Health and Family Welfare to engage up to 25% additional manpower in outsourced services such as sanitation, security, and nursing assistants.
Wearing masks made compulsory: On April 8, the government made it compulsory for all people to wear masks in public places, offices, gatherings, meetings, and personal vehicles.
Identification of paid quarantine facilities: On April 13, the government ordered all district magistrates to identify paid quarantine facilities in their respective districts for housing the people who would like to use private facilities on payment basis.
Creation of a multi-sectoral dedicated team: On April 13, the government ordered for the creation of the Corona Foot Warriors and Containment Team at every booth. The government aims to enhance ground level intervention through them.
Setting up Helpline: On April 17, the Department of Health and Family Welfare set up a dedicated 24x7 Whatsapp number for receiving complaints and requests from the people related to COVID-19.
Measures related to Media
The government took the following steps to control the spread of fake news related to COVID-19:
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
The increasing Non-Performing Assets (NPAs) in the Indian banking sector has recently been the subject of much discussion and scrutiny. Yesterday, the Supreme Court struck down a circular dated February 12, 2018 issued by the Reserve Bank of India (RBI). The RBI circular laid down a revised framework for the resolution of stressed assets. In this blog, we examine the extent of NPAs in India, and recent events leading up to the Supreme Court judgement.
What is the extent and effect of the NPA problem in India?
Banks give loans and advances to borrowers. Based on the performance of the loan, it may be categorised as: (i) a standard asset (a loan where the borrower is making regular repayments), or (ii) a non-performing asset. NPAs are loans and advances where the borrower has stopped making interest or principal repayments for over 90 days.
As of 2018, the total NPAs in the economy stand at Rs 9.6 lakh crore. About 88% of these NPAs are from loans and advances of public sector banks. Banks are required to lend a certain percentage of their loans to priority sectors. These sectors are identified by the RBI and include agriculture, housing, education and small scale industries.[1] In 2018, of the total NPAs, 22% were from priority sector loans, and 78% were from non-priority sector loans.
In the last few years, gross NPAs of banks (as a percentage of total loans) have increased from 2.3% of total loans in 2008 to 9.3% in 2017 (see Figure 1). This indicates that an increasing proportion of a bank’s assets have ceased to generate income for the bank, lowering the bank’s profitability and its ability to grant further credit.
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Figure 1: Gross NPAs (% of total loans)
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Source: Reserve Bank of India; PRS |
What has been done to address the problem of growing NPAs?
The measures taken to resolve and prevent NPAs can broadly be classified into two kinds – first, remedial measures for banks prescribed by the RBI for internal restructuring of stressed assets, and second, legislative means of resolving NPAs under various laws (like the Insolvency and Bankruptcy Code, 2016).
Remedial Measures
Over the years, the RBI has issued various guidelines for banks aimed at the resolution of stressed assets in the economy. These included introduction of certain schemes such as: (i) Strategic Debt Restructuring (which allowed banks to change the management of the defaulting company), and (ii) Joint Lenders’ Forum (where lenders evolved a resolution plan and voted on its implementation). A summary of the various schemes implemented by the RBI is provided in Table 1.
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Table 1: Non-legislative loan recovery framework
Sources: RBI scheme guidelines; Economic Survey 2016-17; PRS. |
Legislative Measures
In June 2017, an internal advisory committee of RBI identified 500 defaulters with the highest value of NPAs.[8] The committee recommended that 12 largest non-performing accounts, each with outstanding amounts greater than Rs 5,000 crore and totalling 25% of the NPAs of the economy, be referred for resolution under the IBC immediately. Proceedings against the 12 largest defaulters have been initiated under the IBC.
What was the February 12 circular issued by the RBI?
Subsequent to the enactment of the IBC, the RBI put in place a framework for restructuring of stressed assets of over Rs 2,000 crore on or after March 1, 2018. The resolution plan for such restructuring must be unanimously approved by all lenders and implemented within 180 days from the date of the first default. If the plan is not implemented within the stipulated time period, the stressed assets are required to be referred to the NCLT under IBC within 15 days. Further, the framework introduced a provision for early identification and categorisation of stressed assets before they are classified as NPAs.
On what grounds was the RBI circular challenged?
Borrowers whose loans were tagged as NPAs before the release of the circular recently crossed the 180-day deadline for internal resolution by banks. Some of these borrowers, including various power producers and sugar mills, had appealed against the RBI circular in various High Courts. A two-judge bench of the Allahabad High Court ruled in favour of the RBI’s powers to issue these guidelines, and refused to grant interim relief to power producers from being taken to the NCLT for bankruptcy. These batch of petitions against the circular were transferred to the Supreme Court, which issued an order in September 2018 to maintain status quo on the same.
What did the Supreme Court order?
The Court held the circular issued by RBI was outside the scope of the power given to it under Article 35AA of the Banking Regulation (Amendment) Act, 2017. The Court reasoned that Section 35AA was proposed by the 2017 Act to authorise the RBI to issues directions only in relation to specific cases of default by specific debtors. It held that the RBI circular issued directions in relation to debtors in general and this was outside their scope of power. The court also held that consequently all IBC proceedings initiated under the RBI circular are quashed.
During the proceedings, various companies argued that the RBI circular applies to all corporate debtors alike, without looking into each individual’s sectors problems and attempting to solve them. For instance, several power companies provided sector specific reasons for delay in payment of bank dues. The reasons included: (i) cancellation of coal blocks by the SC leading to non-availability of fuel, (ii) lack of enough power purchase agreements by states, (iii) non-payment of dues by DISCOMs, and (iv) delays in project implementation leading to cost overruns. Note that, in its 40th report, the Parliamentary Standing Committee on Energy analysed the impact of the RBI circular on the power sector and noted that the ‘one size fits all’ approach of the RBI is erroneous.
[1] ‘Priority Sector Lending – Targets and Classification’ Reserve Bank of India, July 2012, https://rbi.org.in/scripts/NotificationUser.aspx?Id=7460&Mode=0.
[2] Revised Guidelines on Corporate Debt Restructuring Mechanism, Reserve Bank of India, https://www.rbi.org.in/upload/notification/pdfs/67158.pdf.
[3] ‘Framework for Revitalising Distressed Assets in the Economy – Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP)’, Reserve Bank of India, February 26, 2016, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8754&Mode=0.
[4] Timelines for Stressed Assets, Press Release, Reserve Bank of India, May 5, 2017, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10957&Mode=0.
[5] Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries, RBI, July 15, 2014, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9101&Mode=0.
[6] Chapter 4, The Economic Survey 2016-17, http://unionbudget.nic.in/es2016-17/echap04.pdf.
[7] ‘RBI introduces a ‘Scheme for Sustainable Structuring of Stressed Assets’’ Press Release, Reserve Bank of India, June 13, 2016, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=37210.
[8] RBI identifies Accounts for Reference by Banks under the Insolvency and Bankruptcy Code (IBC), Reserve Bank of India, June 13, 2017, https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=40743
