With the government further extending the national lockdown for two weeks till May 17, the Central Bank is considering a proposal for extending the moratorium on bank loans by another three months.
Many requests have come to the RBI from various quarters, including from Indian Banks’ Association, for further extension of moratorium.
The lockdown extension with some relaxations will not generate income due lack economic activities. This would prevent many entities and individuals to service their debt under these 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 as per the officials of the Central Banks in these extraordinary times.
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 installments 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 installments in respect of all term loans outstanding as on March 1, 2020,” the RBI had said.
Also, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months.