On Saturday, the government extended the closure for another two weeks until May 17, with some easing for red, orange and green zones.
The revenue stream is not resuming due to the continuation of nationwide closure, the sources said, adding that so many entities and individuals will not be able to service their debt in these circumstances by the end of the current moratorium period ending it. May 31st.
So extending the moratorium by another three months would be a practical approach from the regulator, a senior banking sector said.
It will help both borrowers and banks in these difficult times, the official added.
the Reserve Bank of India (RBI) had on March 27 allowed banks and financial institutions to offer a three-month moratorium on the payment of facilities for all outstanding term loans on March 1 to help mitigate difficulties faced by borrowers.
“All commercial banks (including regional rural banks, small finance banks and local area banks), cooperative banks, all India Financial Institutions and NBFCs (including home finance companies and microfinance institutions) (” lending institutions “) are authorized to authorize a a three-month moratorium on the payment of facilities for all outstanding term loans as of March 1, 2020, “RBI had said.
Accordingly, it has said that the repayment schedule and all subsequent due dates, including the tenor of such loans, can be moved across the board by three months.
As a result of this moratorium, individuals have EMI Repayment of loans taken was not deducted from their bank accounts, providing much needed liquidity.
The loan’s EMI payments will not be restarted until the 3-month moratorium expires.
RBI Governor Shaktikanta Das on Saturday held a public meeting with public and private banks where the issue of loan moratorium was also reviewed.
Credit flows to various sectors of the economy, including liquidity for non-banking financial institutions, microfinance institutions, housing finance companies, mutual funds, etc., and post-lockdown credit flows including supply of working capital, with a particular focus on credit flows to MSMEs were also considered.
The Supreme Court earlier this week ordered the RBI to ensure that its March 27 guidelines directing lending institutions to provide a 3-month loan to all borrowers are implemented in letter and spirit.
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