The RBI calls on bankers to meet Saturday to discuss moratorium

KOLKATA: The Book Bank of India (RBI) has convened a meeting with the country’s top banks on Saturday to extend the benefits of payment moratorium to non-bank providers, told two people familiar with the development to ET. The move comes after a directional direction to the regulator that the intended beneficiaries get their due.

Therefore, several lenders, including the State Bank of India and Punjab National Bank, which were previously not to extend the three-month payment holiday to non-bank finance companies and microfinance firms, may now have to review their decision.

The Supreme Court had recently asked the RBI to ensure that every borrower gets the moratorium allowance in “letter and spirit.”

The meeting will be conducted through video conferencing, two bank executives said, confirming the development.

The Banking Regulatory Authority has also convened a separate meeting with leading NBFCs and microfinance companies, together with their industry organizations, which have requested authorities to obtain moratorium payments from their lending banks.

The banking sector was split over the issue of moratorium on NBFCs and MFIs borrowing from them for lending. In addition to a number of public banks, several private sector lenders were also against it. Foreign banks, on the other hand, have been more open, said microfinance sector captains.

However, these lenders have offered the benefit to retail borrowers at tide during the period of financial stress caused by Lockdown.

“If SBI expands it, most other banks are likely to follow,” said a senior manager in a rival bank.

The Supreme Court on Thursday called on the RBI to ensure that its March 27 guidelines directing lending institutions to provide a 3-month loan to all borrowers are being implemented.

“The learned lawyer of the petitioner claims that the circular … issued by the Indian Reserve Bank has not been implemented by the banks,” the Supreme Court said. “Based on the above, we are referring to the Indian Reserve Bank to ensure the implementation of the circular … in its letter and spirit.”

The RBI had asked banks to devise a board-driven policy to offer moratorium on payments to stressed borrowers as part of a financial package to combat Covid-19-induced stress.

“Hopefully, the SC’s guidance on getting rid of the spirit should end the moratorium issue,” said Manoj Nambiar, president of the Microfinance Institutions Network, a self-regulatory authority for NBFC MFIs.

In the absence of moratorium from all their lenders, NBFCs and MFIs are under severe stress, people said close to the case. They have extended the moratorium to their lenders, but the absence of back-to-back support from banks has created liquidity disparities for them.

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