Irdai grants 3-month moratorium on term loans sanctioned by insurers

Following in the footsteps of the Reserve Bank of India, the Insurance Regulatory and Development Authority of India (Irdai) has said insurers can grant a moratorium of three months towards payment of installments of term loans sanctioned by them falling due between March 1, 2020 and May 31, 2020.

“The Authority has received representations from industry associations seeking moratorium on repayment of term loans sanctioned by the insurers, in the context of outbreak of Covid-19”, Irdai said.

The RBI had issued directions on March 27, 2020 and asked banks, non-banks to provide moratorium on term loans for a period of three months starting from March 1, 2020.

The insurance regulator granting the same said the repayment schedule for such loans and also the residual tenor, will be shifted across the board by three months subsequent to the moratorium period and interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

The regulator has also clarified that the asset classification of the term loans which have been granted moratorium will be based on the revised due dates and revised repayment schedule.

And, any rescheduling of payments that includes interest on the loans will not be taken as a case of default for the purpose of reporting non-performing assets. Furthermore, the Irdai has said, insurance companies will have to take board approvals to extend moratorium on term loans granted to provide relief to the borrowers.

“Concurrent Auditors in their reports for the quarter ending June, 2020 shall confirm that the insurers have complied with the board approved policy in granting moratorium”, Irdai said.