This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts till the above mentioned time. The loan EMI payments will restart only once the time period expires.
The central bank’s governor Shashikanta Das made the announcement, much needed by the middle class and small entrepreneurs, and said the deferment will not impact the credit history of the borrower.
The three-month moratorium allowed by RBI will help borrowers in easing the burden on their savings and avoid turning defaulters.
RBI has also allowed banks to restructure the working capital cycle for companies without worrying that these will have to be classified as non-performing assets (NPAs) during the 21-day countrywide lockdown.
“Moratorium on Term Loans of 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,” RBI said in a release.
“Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months,” it added.
Soon after, Union finance minister Nirmala Sitharaman tweeted to say measures announced by RBI gave a “much-desired relief”.
“Appreciate @RBI @DasShaktikanta’s reassuring words on financial stability. The 3 month moratorium on payments of term loan instalments (EMI) & interest on working capital give much-desired relief. Slashed interest rate needs quick transmission (sic),” Sitharaman said.
RBI governor Das also slashed the key lending repo rate by 75 basis points to 4.4% and reverse repo rate by 90 basis points to 4% to revive economic growth amid the spread of the deadly coronavirus pandemic.
The announcements came as the country entered the third day of three-week nationwide lockdown to curb the spread of the virus.
The decisions were taken in an unscheduled meeting of RBI’s monetary policy committee (MPC), which was originally scheduled to hold its bi-monthly review early next month.
