The Reserve Bank of India (RBI) on Friday extended the moratorium on loan repayments by another 3 months. In a video press conference held today, the RBI Governor Shaktikanta Das announced that the term loan moratorium is extended till August 31.
He also added that the lending institutions are permitted to restore the margins for working capital to the origin level by March 31, 2021.
In its bid to ease the burden of debt servicing and to ensure the continuity of viable businesses which are disrupted due to COVID-19 pandemic, RBI on March 29 announced a ‘COVID-19 – Regulatory Package’ allowing financial institutions to allow a three-month moratorium for all term loans besides easing the working capital financing norms for businesses.
As per the moratorium “all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) (“lending institutions”) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020.
The monetary policy committee (MPC) of the RBI have also cut the repo rate by 40 basis points to 4 per cent.