The Reserve Bank of India (RBI) on Friday allowed banks, non-banking financial institutions (NBFCs), including housing finance companies, and other financial institutions to allow a three-month moratorium on installment payments on term loans due to disruptions that caused the coronavirus outbreak.
Central Bank Governor Shashikanta Das made the announcement, much needed by the middle class and small businesses, and said the delay would not affect the borrower’s credit history.
A quarterly moratorium allowed by the RBI will help borrowers ease the burden of their savings and avoid default.
The RBI also allowed banks to restructure their working capital cycle for companies, without worrying that they would have to be classified as non-performing assets (NPAs) during the country’s 21-day closure.
“Moratorium on term loans All commercial banks (including regional village banks, small financial banks and local banks), cooperative banks, All-India financial institutions and the NBFC (including housing and microfinance companies) (” lending to the institution “) may grant a moratorium on three months to pay the installment for all term loans on March 1, 2020, “the RBI said in a statement.
“Accordingly, the repayment schedule and any subsequent maturities, as well as the deadlines for such loans, can be shifted by three months throughout the administration,” it added.
Shortly thereafter, Union Finance Minister Nirmala Sitharaman said he said the measures announced by the RBI gave “much-needed assistance”.
“We appreciate the encouraging words of @RBI @ DasShaktikant on financial stability. A three-month moratorium on installment payments, EMIs and working capital interest rates make it easier to get the help you want. The reduced interest rate needs fast transfer (sic), ”Sitharaman said.
RBI Governor Das also reduced the key repo rate by 75 basis points to 4.4% and the reverse repo rate by 90 basis points to 4% to revive economic growth amid the spread of the deadly coronavirus pandemic.
The announcement came as the country entered the third day of a three-week shutdown across the country to suppress the spread of the virus.
The decisions were made at an unscheduled meeting of the RBI’s Monetary Policy Committee (MPC), initially scheduled to hold a bi-monthly review early next month.
. (ToTranslate tags) Shaktikanta Das