RBI may extend the moratorium on bank loans by 3 monthsMon May 04 2020 / By: Rashmi
In the wake of ongoing coronavirus crisis, Reserve Bank of India (RBI) held two separate meetings with the heads of various public and private sector banks. The meeting was held online through video conferences. Understanding the importance of it, the meeting was attended by Governor Shaktikanta Das, Deputy Governor and senior officials of RBI along with the MD and CEOs of major public and private sector banks.
One of the most important discussions was made on the implementation of 3 months moratorium of the repayment of bank loans.
As per the reports, many banks have requested the RBI to extend the grant to another 3 months to the borrowers owing to the pandemic outbreak. However, some banks are not ready to allow NBFCs the benefit of 3-month moratorium.
As per sources, Bank of India, Bank of Baroda and Indian Bank were in favour of giving moratorium relief to NBFCs, while State Bank of India (SBI) had continued to stay on the other side of the discussion.
However, RBI conveyed that NBFCs are covered under `borrowers' to be eligible for a moratorium; thus, giving them a chance to stay afloat during this crisis. This step by RBI can be the result of complaints by the NFBCs claiming they are being deprived of the moratorium.
Along with this statement, RBI also said that banks can also use their discretion to decide the eligibility of firms based on their credit and liquidity profile.
Earlier, RBI had announced a moratorium on loan EMIs and credit card dues between the period of March 1, 2020, and May 31, 2020.
Other Points Discussed in the Meeting
As per the official website of RBI, the meetings aimed to review the current economic situation and discuss crucial matters to ensure the proper functioning and stability of the banking sector of the country.
The meeting touched upon various matters including review of the flow of credit to different sectors of the economy, "including liquidity to Non-Banking Financial Companies, Micro Finance Institutions, Housing Finance Companies, Mutual Funds, etc." They also discussed the post lockdown credit flows with a special focus on credit flows to MSMEs.
Apart from this, monitoring of overseas branches was also done since coronavirus is affecting the economies of all over the world.
The lenders also highlighting the fact the relief by the government is not enough since 80% of their corporate borrowers are working in the red zones where hardly any relaxation is offered in terms of business revival.
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