RBI repayment moratorium: All loans, credit card dues will be covered

The moratorium on loan repayments between March 31 and May 31 is applicable to all types of retail credit, including unpaid credit card balances, the Reserve Bank announced Friday.

To ease the debt service burden of the disruption caused by the Covid pandemic and to ensure the continuity of viable businesses, the RBI announced a three-month moratorium on all payments, including personal loans and credit card balances, except business loans.

In issuing detailed instructions for announcing the moratorium later today, the RBI said: “The payments include payments due from March 1 to May 31 such as principal and / or interest; bullet reimbursements; assimilated monthly payments; and credit card fees.

He also said that the repayment schedule for these loans, as well as the residual content, would be delayed three months after the end of the moratorium. Interest will continue to accrue on the outstanding portion of the term loans during the moratorium period.

Term loans and working capital include all term loans (including agricultural term loans, personal and crop loans), all commercial banks (including regional rural banks, small financial banks and local banks), cooperative banks, financial institutions across India, and the NBFCs (including housing finance companies) are allowed to grant a three-month moratorium on payment.

In the case of working capital facilities sanctioned in the form of cash / overdraft facilities, lenders are authorized to defer the recovery of interest applied in respect of all such facilities during the deferment period.

But accumulated accrued interest will be recovered immediately after the end of this period, the RBI said.

With regard to working capital facilities for borrowers facing stress due to the economic fallout from the pandemic, lenders can recalculate attractiveness by reducing margins and / or reassessing the working capital cycle .

But the relief will be available for all these changes made until May 31 and will be subject to the condition that the credit institutions ensure that this is necessary because of the economic fallout from the pandemic.

The concessions granted will be subject to subsequent prudential examination as to their justification due to the economic benefits.

Regarding the NPA classification or special mention account (SMA) and non-performing assets, the RBI stated that the moratorium / adjournment / recalculation of “ drawing power ” is provided specifically to allow borrowers to control the economic fallout from the pandemic, the same will not be treated as a concession or a modification of the terms and conditions of the loan agreements due to the borrower’s financial difficulties within the prudential framework of resolution of stressed assets) instructions of 2019 from June 7, 2019.

Therefore, such a measure, in itself, should not result in a downgrading of the asset classification, said the RBI, adding that the asset classification of the term loans benefiting from reduction will be determined on the basis of dates d ‘revised maturity and revised repayment schedule.

Similarly, the working capital where the relief is granted, the ADM and the status in default will be assessed taking into account the application of the interest accrued immediately after the end of the adjournment period as well as the revised conditions, a he declared.

In addition, the rescheduling of payments, including interest, will not be considered a default for monitoring reports and reports to credit reporting companies by lenders.

The CICs were asked to ensure that the measures taken by the credit institutions in accordance with the above announcements did not have a negative impact on the credit history of the beneficiaries.

From an operational standpoint, lenders will develop policies approved by the board of directors to provide the above reliefs to all eligible borrowers, including, but not limited to, objective criteria for the examination of reliefs.

Whenever the exposure of a credit institution to a borrower is greater than or equal to 5 crores of rupees on March 1, 2020, the bank prepares a GIS on the relief granted to its borrowers, which must include information on the borrower and on the credit facility regarding the nature and amount of relief provided.

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