RBI extends moratorium by 3 months

Facility also for borrowers who did not opt for the same in March, says SBI

The Reserve Bank of India (RBI) has extended the moratorium on repayment for term loans by another three months till August 31.

All other conditions for the facility remain unchanged, that is, the loan will not be classified by the lender as ‘non-performing’ and there will not be any impact on the individual credit score. “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 June 1, 2020 to August 31, 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,” the RBI said.

In end March, the regulator announced the moratorium for a three-month period — March 1 to May 25. The banking regulator has also extended the interest payment deferment for working capital loans by another six months.

Rajnish Kumar, chairman, State Bank of India, said borrowers who did not opt for the moratorium in March would also be allowed to avail themselves of the facility for the next three months. Mr. Kumar said only 20% of SBI borrowers had availed of the loan moratorium.

“Moratorium extension is the need of the hour. We are extending moratorium to all borrowers across all segments,” said Padmaja Chunduru MD CEO Indian Bank.

On the issue of moratorium to non-banking finance companies, Mr. Kumar said the bank would extend the facility on a case-by-case basis, depending on the cash flows of non-banking institutions. Banks had decided to extend moratorium to NBFCs in case these firms face negative cash flow, that is, if cash outgo is higher than the inflows.

NBFCs had extended the repayment moratorium to their customers, but faced difficulty in getting one for themselves from banks. “The uncertainty associated with the pandemic, normalisation of economic activity and relaxation made in social distancing makes it imperative that policy response is calibrated and swift,” the SBI Chairman said.

“In this context, extension of moratorium till August 31, enlargement of the Large Exposure Framework, and the option to convert accumulated interest for moratorium period into term loan are welcome measures. On the export side, increase in export credit period to 15 months from one year and buttressing EXIM Bank through a ₹15,000-crore line of credit is also timely.

“Overall, successive measures by RBI and the Centre indicates the desire to go full throttle to support the economy in current unprecedented times,” he said.