Has the loan moratorium been extended by RBI: All you should know

New Delhi, Aug 06: The Reserve Bank of India had announced an extension of the moratorium on term loan by EMIs by another three months ie till August 31 2020 in a press conference held on May 22 2020.

The extension of the three month EMI moratorium on repayment of term loans means that borrowers will not have to pay their EMI instalment prescribed by the RBI until such period.

In today's address, RBI Governor, Shaktikanta Das said that the MPC decided to keep the repo rate unchanged 4 per cent.

It has been decided to provide a window under the June 7, 2019 framework of the RBI to enable lenders to implement resolution plan without change in ownership and in respect of personal loans, while classifying them as standard assets subject to certain conditions, Das said. However the RBI Governor did not make any announcement on the extension of the moratorium.

The earlier statement issued on Developmental and Regulatory policy of the centra bank said, "on March 27, 2020, the RBI permitted 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) (referred to hereafter as "lending institutions") to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. In view of the extension of the lockdown and continuing disruptions on account of COVID-19, it has been decided to permit lending institutions to extend the moratorium on term loan instalments by another three months, i.e., from June 1, 2020 to August 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by another three months."

"As the moratorium/deferment is being provided specifically to enable borrowers to tide over COVID-19 disruptions, the same will not be treated as changes in terms and conditions of loan agreements due to financial difficulty of the borrowers and, consequently, will not result in asset classification downgrade. As earlier, the rescheduling of payments on account of the moratorium/deferment 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 in pursuance of the announcements made today do not adversely impact the credit history of the borrowers. In respect of all accounts for which lending institutions decide to grant moratorium/deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall also exclude the extended moratorium/deferment period. Consequently, there would be an asset classification standstill for all such accounts during the 5 moratorium/deferment period from March 1, 2020 to August 31, 2020. Thereafter, the normal ageing norms shall apply. NBFCs, which are required to comply with Indian Accounting Standards (IndAS), may follow the guidelines duly approved by their Boards and advisories of the Institute of Chartered Accountants of India (ICAI) in recognition of impairments. Thus, NBFCs have flexibility under the prescribed accounting standards to consider such relief to their borrowers," the policy statement also had read.