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RBI allows a 3-month moratorium period on payment of EMI’s to mitigate the effect of Coronavirus

Team SoOLEGAL 28 Mar 2020 3:10pm

RBI allows a 3-month moratorium period on payment of EMI’s to mitigate the effect of Coronavirus

To provide relief to the middle class in the midst of the disruption caused by the lockdown, Reserve Bank of India allowed banks and other financial institutions to allow a three-month moratorium on payment of instalments due from March 1, 2020 to May 31, 2020.

All commercial banks including regional rural banks, cooperative banks, NBFCs (including housing finance companies) and 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”, RBI governor Shaktikanta Das stated while addressing a press conference.

Under normal circumstances if loan repayment is extended then the credit history of the borrower and the loan risk rating may be adversely affected. However, the credit rating of the borrower will not be affected in any way in the event of this moratorium, as per the RBI notice.

The RBI further stated, in respect of all term loans (including agricultural term loans, retail and crop loans), 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) (“lending institutions") are permitted to grant a moratorium of three months on payment of all instalments”.

The repayment schedule for these loans would be adjusted by three months after the moratorium period and interest on the unpaid portion of the term loans would continue to accrue throughout the moratorium phase.

This decision was taken to mitigate the effect of COVID-19 on the economy as the whole country is in lockdown.



Tagged: COVID-19   Economy   RBI governor   Coronavirus   Reserve Bank of India  
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