Permits convertion of accumulated interest on working capital facilities over the deferment period (up to 31 August 2020) into a funded interest term loanThe Reserve Bank of India (RBI) on 27 March 2020 had permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (referred to hereafter as lending institutions) to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on 1 March 2020.
In view of the extension of the lockdown and continuing disruptions on account of COVID-19, it has been decided to permit lending institutions to extend the moratorium on term loan instalments by another three months, i.e., from 1 June 2020 to 31 August 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by another three months.
Deferment of interest on working capital facilities
In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of another three months, from 1 June 2020 to 31 August 2020, in addition to the three months allowed on 27 March 2020 on payment of interest in respect of all such facilities outstanding as on 1 March 2020.
Payment of interest on working capital facilities for the deferment period
In order to ameliorate the difficulties faced by borrowers in repaying the accumulated interest for the deferment period on working capital facilities in one shot, lending institutions are permitted to convert the accumulated interest on working capital facilities over the deferment period (up to 31 August 2020) into a funded interest term loan which shall be repayable not later than the end of the current financial year (i.e., 31 March 2021).
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