Rupee (Representational image) | Dhiraj Singh | Bloomberg File photo
Representational image | Dhiraj Singh | Bloomberg
Text Size:

New Delhi: In a relief to borrowers, the Reserve Bank of India (RBI) Friday announced a further extension of the loan moratorium by three months for all term loans.

This means borrowers who are not able to repay their loans due to monetary difficulties do not need to pay any equated monthly installment (EMI), including both the principal and interest component, until 31 August.

Opting for this deferment will not adversely impact the credit history of the borrowers. However, interest will keep accruing on these loans.

This will benefit those who have taken home loans, auto loans and agricultural loans, besides companies.


Also read: Modi govt has got it right. India doesn’t need a bigger stimulus


The lockdown impact

On 27 March, the RBI had announced a three-month loan moratorium till 31 May for all term loans, acknowledging the cash flow problems faced by individuals and companies due to the nationwide lockdown enforced on 25 March. The borrowers were given a choice by banks to continue with their repayments if they can afford to.

However, at the time, the central bank’s decision had not factored in that the lockdown could last for over two months. With extensions to the lockdown, sectors like manufacturing and services have been adversely impacted.

We are deeply grateful to our readers & viewers for their time, trust and subscriptions.

Quality journalism is expensive and needs readers to pay for it. Your support will define our work and ThePrint’s future.

SUBSCRIBE NOW

Due to migrant workers preferring to go back to their towns and villages, many industrial units are struggling to reopen even though they are now allowed to do so by the respective state governments.

For banks like the State Bank of India, around 15-20 per cent of the individual and corporate borrowers had availed of the moratorium, SBI Chairman Rajnish Kumar had told ThePrint earlier this month.

Other announcements

On Friday, the RBI also announced that banks will also be allowed to defer interest on working capital facilities by another three months.

Further, to ease pressure on companies from payment of the entire interest component in one go, the central bank also announced that the accumulated interest could be paid in installments up to 31 March 2021.

The Indian economy is likely to contract in 2020-21, RBI Governor Shaktikanta Das said Friday in a digital address, pointing out that the impact of the Covid-19 pandemic on all macroeconomic variables has been much worse than initially anticipated.

RBI has announced a 1.15 percentage point rate cut since 27 March to support growth. However, with risk aversion among both banks and borrowers, credit offtake has remained muted.


Also read: The 3 big unknowns that have forced Nirmala Sitharaman to be prudent with economic package


 

Subscribe to our channels on YouTube & Telegram

News media is in a crisis & only you can fix it

You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust.

You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism.

We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And we aren’t even three yet.

At ThePrint, we invest in quality journalists. We pay them fairly and on time even in this difficult period. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. Our stellar coronavirus coverage is a good example. You can check some of it here.

This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. Because the advertising market is broken too.

If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous, and questioning journalism, please click on the link below. Your support will define our journalism, and ThePrint’s future. It will take just a few seconds of your time.

Support Our Journalism

3 Comments Share Your Views

3 COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here