You are here: Home » Opinion » Letters
Business Standard

Letter to BS: Extending moratorium will make it harder for everyone

Tinkering with the NPA norms will merely push the problem to a later date

Non performing assets | Moratorium

Business Standard 

lending, loan, bank, real estate, realty,

The Reserve Bank of India (RBI) and the banks in general are in a dilemma whether to end or extend the on August 31. Ending it when the economy is yet to start recovering will mean large scale loan defaults. Extending the beyond August 31, on the other hand, will allow little time to the banks to pursue recovery. Since interests and charges continue to accrue, the borrowers will be staring at mammoth repayments when the is finally lifted. Presuming that even half of the MSME, personal, auto and credit card account holders default, there will be a huge surge in non-performing assets (NPAs). Tinkering with the NPA norms will merely push the problem to a later date. So it may be a better idea to end the moratorium on the stipulated date and allow the banks to recover as much of the loans as possible, making provisions for the rest, well before March 31, 2021. This will also help the borrowers to prepare themselves psychologically to arrange for funds to repay their loans. Postponing the problem will make it harder for everyone – borrowers, banks and the RBI.



What you get on Business Standard Premium?

  • icon Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • icon Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • icon Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
  • icon Pick your 5 favourite companies, get a daily email with all news updates on them.
  • icon 26 years of website archives.
  • icon Preferential invites to Business Standard events.


Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, July 27 2020. 23:43 IST