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RBI moratorium : Credit card dues also covered


The Reserve Bank of India (RBI) today clarified that the moratorium of three months on payment of all instalments on term loans, announced earlier today, will also apply to credit card dues. 

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 today came up with ‘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. 

RBI’s earlier notification read “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.”

However, confusion prevailed on the fate of credit card dues since they are defined as revolving credit and not term loans. Social media was soon flooded with queries about the credit card dues. Responding to public queries seeking clarity on credit card dues, the Central bank issued a revised ‘COVID-19 – Regulatory Package’ notification which included ‘credit card dues’ under the ambit of instalments. 

A footnote in the revised notification clarified that instalments will include the following payments falling due from March 1, 2020 to May 31, 2020: (i) principal and/or interest components; (ii) bullet repayments; (iii) Equated Monthly instalments; (iv) credit card dues.

In a twitter post, India’s public broadcaster Prasar Bharati News Services also said, “RBI Clarification: Three months’ moratorium on credit card dues also qualify for the new guidelines.”

However, the RBI guidelines did not clarify whether the moratorium covers loans taken on credit cards. 

RBI’s notification further stated that the repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

The Central bank also announced that the rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs) by the lending institutions. 

“CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries,” the Central bank’s notification stated.

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