In a press conference today, the Reserve Bank of India (RBI) announced that all banks and NBFCs have been given a pass to allow deference in loan repayments to borrowers for a period of 3 months, for loans outstanding on March 1, 2020.
This pass, or moratorium, means that borrowers will not have to pay the EMI installments for their loan repayment during the moratorium period, in this case for 3 months.
In a statement, the RBI said, “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 and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.
Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months. “
This moratorium implies that the EMI installments would not be deducted from the borrower’s bank account till the moratorium period is ongoing. This moratorium is being provided to handle the economic crunch that is being experienced due to the COVID-19 outbreak.
Further adding to the statement, the RBI said, “The rescheduling of payments 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.”.