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Covid-19 crisis: RBI may extend moratorium on bank loans by 90 more days

Suggestions from various quarters, including from Indian Banks' Association, have come for the further extension of moratorium and the RBI is actively considering them, according to sources.

Topics
Reserve Bank of India RBI | Indian Banks | Lockdown

Press Trust of India  |  New Delhi 

RBI
Income stream will not resume due to the continuation of nationwide lockdown, the sources said, adding that so many entities and individuals will be unable to service their debt in this circumstances at the end of the present moratorium period ending on May 31.

With further extension of the nationwide lockdown, the RBI is considering a proposal for extending the moratorium on by another three months to help people and industry impacted by the ongoing to contain COVID-19.

Suggestions from various quarters, including from Indian Banks' Association, have come for the further extension of moratorium and the RBI is actively considering them, according to sources.

The government on Saturday extended the for further two weeks till May 17 with certain relaxations for red, orange and green zones.

Income stream will not resume due to the continuation of nationwide lockdown, the sources said, adding that so many entities and individuals will be unable to service their debt in this circumstances at the end of the present moratorium period ending on May 31.

So, extension of moratorium by another three months would be a practical approach from the regulator, a senior public sector bank official said.
 

It will help both borrowers and in these difficult times, the official added.

The Reserve Bank of India (RBI) had on March 27 allowed and financial institutions to offer a moratorium of three months on payment of instalments of all term loans outstanding as on March 1 to help mitigate hardship faced by borrowers.

"All commercial (including regional rural banks, small banks and local area banks), co-operative banks, all -India Financial Institutions, and (including housing companies and micro-institutions) ("lending institutions") are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020," the RBI had said.

Accordingly, it had said, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months.
 

As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much needed liquidity.

The loan EMI payments will restart only once the moratorium time period of 3 months expires.

RBI Governor Shaktikanta Das on Saturday held a meeting of held meeting with public and private sector banks where the issue of loan moratorium was also reviewed.

Credit flows to different sectors of the economy, including liquidity to non-banking financial companies, microfinance institutions, housing finance companies, mutual funds, etc, and post credit flows including provision of working capital, with special focus on credit flows to MSMEs were also deliberated.

The Supreme Court earlier this week directed the RBI to ensure that its March 27 guidelines directing lending institutions to allow a three-month moratorium to all borrowers is implemented in letter and spirit.

First Published: Mon, May 04 2020. 23:00 IST
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