RBI may extend moratorium on loans by another 3 months

RBI may extend moratorium on loans by another 3 months

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.

PTIUpdated: Monday, May 04, 2020, 10:20 PM IST
article-image
Reserve Bank of India (RBI) |

New Delhi, May 4 (PTI) With further extension of the nationwide lockdown, the RBI is considering a proposal for extending the moratorium on bank loans by another three months to help people and industry impacted by the ongoing lockdown 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 lockdown 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 banks in these difficult times, the official added.

The Reserve Bank of India (RBI) had on March 27 allowed banks 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 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) ("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 lockdown 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.

RECENT STORIES

GST Reforms Boost Uttar Pradesh's Economy, Empowering Artisans & MSMEs With Lower Taxes & Global...

GST Reforms Boost Uttar Pradesh's Economy, Empowering Artisans & MSMEs With Lower Taxes & Global...

Mumbai & Pune's Housing Sales Drop 17% to 49,542 Units On Lower Demand Amid Sharp Surge In Prices Of...

Mumbai & Pune's Housing Sales Drop 17% to 49,542 Units On Lower Demand Amid Sharp Surge In Prices Of...

Union Cabinet Approves ₹6,957 Crore NH-715 Widening & Elevated Corridor In Assam To Boost...

Union Cabinet Approves ₹6,957 Crore NH-715 Widening & Elevated Corridor In Assam To Boost...

Government Mulling Over Proposal For Creation Of ₹20,000 Crore Risk Guarantee Fund To Push...

Government Mulling Over Proposal For Creation Of ₹20,000 Crore Risk Guarantee Fund To Push...

Government Generates ₹3,296.71 Crore From E-Waste & Scrap Disposal, More Than 696.27 Lakh Sq Feet...

Government Generates ₹3,296.71 Crore From E-Waste & Scrap Disposal, More Than 696.27 Lakh Sq Feet...