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.

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

Why news media is in crisis & How you can fix it

India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises.

But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.

ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India or overseas, you can do it here.

Support Our Journalism

VIEW COMMENTS

4 COMMENTS

  1. Despite sending an email to wecare@bajafinserv during lockdown informing that won’t be possible to pay the housing emi until September. I have betrayed getting harassment calls for the same, and despite that no acknowledgement received the banks ends confirming the same.

    Please help.

  2. I have lot of problem..I am starting new job from this month..so I paid emi delay two month..

Comments are closed.