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COVID Resolution Framework: Mandatory Financial Ratios

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2020-21/34 · issued 07 Sep 2020 · ~2 min read
Quick answerRBI mandates five key financial ratios—TOL/ATNW, Total Debt/EBITDA, Current Ratio, DSCR, and ADSCR—for all resolution plans under Part B of the COVID-19 stress framework, with sector-specific thresholds. For sectors without specified thresholds, current ratio and DSCR must be at least 1.0, and ADSCR at least 1.2.

What changed

RBI broadly accepted the K.V. Kamath Expert Committee's recommendations on financial parameters for COVID-19 resolution plans. Lending institutions must now mandatorily consider TOL/ATNW, Total Debt/EBITDA, Current Ratio, DSCR, and ADSCR with sector-specific thresholds. For sectors without specified thresholds, banks must internally assess TOL/ATNW and Total Debt/EBITDA, while current ratio and DSCR must be at least 1.0 and ADSCR at least 1.2.

What it means for you

Banks and lenders have a standardized framework for restructuring eligible borrowers under Part B, reducing discretion and ensuring consistency. The mandatory ratios and thresholds provide clear benchmarks, but lenders can still use additional parameters. The graded approach based on pandemic impact severity (mild, moderate, severe) allows flexibility in implementation.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All commercial banks including SFBs, LABs, RRBs, Primary (Urban) Co-operative Banks, State Co-operative Banks, DCCBs, All-India Financial Institutions, NBFCs including HFCs

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What if a sector is not listed in the Annex with specific thresholds?

For such sectors, lending institutions must make their own internal assessments for TOL/ATNW and Total Debt/EBITDA. However, current ratio and DSCR must still be 1.0 or above, and ADSCR 1.2 or above. For sectors with specified thresholds, the Annex values apply.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #344: DOR.No.BP.BC/13/21.04.048/2020-21 — "Resolution Framework for COVID-19-related Stress - Financial Parameters" dated September 7, 2020”
📜 Read the original circular — full text as issued by RBI
RBI/2020-21/34 DOR.No.BP.BC/13/21.04.048/2020-21 September 7, 2020 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) All Primary (Urban) Co-operative Banks/State Co-operative Banks/District Central Co-operative Banks All All-India Financial Institutions All Non-Banking Financial Companies (including Housing Finance Companies) Madam / Dear Sir, Resolution Framework for COVID-19-related Stress – Financial Parameters Please refer to Paragraphs 23 and 24 of the Annex to the circular DOR.No.BP.BC/3/21.04.048/2020-21 dated August 6, 2020 (“ Resolution Framework ”) which envisages constitution of an Expert Committee by the Reserve Bank to make recommendations on the required financial parameters with sector specific benchmark ranges for such parameters to be factored in the resolution plans in respect of borrowers eligible under Part B of the Annex to the Resolution Framework. 2. The Reserve Bank had accordingly set up an Expert Committee with Shri K. V. Kamath as the Chairperson, as announced in the press release dated August 7, 2020 . The Expert Committee has since submitted its recommendations to the Reserve Bank on September 4, 2020 , which have been broadly accepted by the Reserve Bank. 3. Accordingly, all lending institutions shall mandatorily consider the following key ratios while finalizing the resolution plans in respect of eligible borrowers under Part B of the Annex to the Resolution Framework: Key Ratio
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/34 · issued 07 Sep 2020. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11961&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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