In its weekly meeting on Wednesday, the committee decided that NBFCs, like other companies, would be offered a three-month moratorium on interest payment. However, these companies must show a cash shortage to prove that they will not use the relief to redirect funds for other purposes.
“It’s not offered by default. NBFCs have to apply for it. Our business units then decide which ones will get relief. They will have to show their cash flow and outflow to prove they need this relief and will not use the money for some other purpose, “said a person with direct knowledge of the decision at the SBI meeting.
SBI’s decision could open the door for other public banks to extend the benefits to these lenders as well.
So far, SBI has refused to extend it to NBFCs citing abuse by these borrowers.
The SBI argued that unlike non-financial corporations, NBFCs have not been totally hit by the closure, as some borrowers, like paying off their bank loans, continue to repay NBFCs.
It was difficult to check how much of the loans were repaid by NBFCs. Some back managers were also afraid that mostly NBFCs, promoter-controlled, would direct the cash flow gains out of the moratorium to their other companies or pay down other borrowers as from the bond market.
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