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The central board of the Reserve Bank of India is holding its first meeting since the outbreak of the COVID-19 pandemic today. The virtual board meeting is expected to commence at 11 am on Friday. The board is expected to discuss the state of the economy, and the banking sector in particular. The RBI has granted several relief measures to mitigate the impact of COVID-19 pandemic, including a six-month moratorium on loan repayments for all working capital and term loans. However, the clamor for a one-time restructuring of loans is growing by the day as banks fear asset quality stress build-up due to the hit to businesses and individuals alike. Coming a day ahead of the RBI central board meeting, the Finance Minister�s comments on the matter are also important to note. In a conference organised by the Chennai International Centre yesterday, Finance Minister Nirmala Sitharaman said, �an intense engagement is on with the RBI to come up with such (one-time restructuring) scheme. There is a lot of stress now.� It must be noted that RBI does not need the board�s permission to allow or disallow any scheme for banks. Decisions on the regulation and supervision of banks are taken by RBI�s internal committee. However, the board�s comments in this regard may be important and will be taken under advisement by the regulator. While the government and banks have been engaging with the central bank to consider this relief, RBI has been hesitant to allow it so far. This is because of the rampant misuse of the scheme in the past, which led to a pile-up of bad loans that took years to clean up. To be sure, there is nothing stopping banks from restructuring accounts, provided they first declare them NPAs. This provision is available to them under the overarching framework of the June 7 circular on resolution of bad loans from RBI. However, banks say this will require them to set aside a large chunk of capital which is scarce to come by in these uncertain times. Banks insist a one-time restructuring without downgrading the loan to NPA will allow them to stitch the repayment plan as per the borrowers repayment capacity, while keeping provisioning limited to 5 percent. For now, RBI has permitted a moratorium on loan repayments until the end of August, and also allowed banks the benefit of asset classification standstill. It has also asked banks to conduct a stress test on their books to assess the impact of COVID19 on their balance sheet, asset quality, liquidity, profitability, capital adequacy.