With rising cases affecting both small and large enterprises, banks are again seeking loan relief measures from the Reserve Bank of India to assist debtors in the loan fight against Covid-19’s second wave and to provide relief for their bank balances, as they face the threat of a rise in nonperforming assets (NPAs).
Both banks and the RBI are currently trying, according to sources within the bank industry, to understand and evaluate the complete impact of the current situation. Fragmented lockdowns and recoveries across the countries have cast doubts about the path of the second wave and its consequences for companies and the economy. But a moratorium request was made on the cards, sources added.
What The CEO Said on loan Moratorium
Sunil Mehta, CEO of the Association of Indian Banks, told ET Now, “As we are currently assessing the loan situation, we can not make a moratorium request for a specific period. As of now, the scenario is not clear. Banks will analyze the impact of the second wave and all loan lenders will present a common opinion to the RBI. “
“The problem with banks requesting a certain loan moratorium is, what if the RBI is willing to extend relief more than required? We know that the RBI knows the need for the loan hour and we hope to take a call accordingly, “said a banker on anonymity.
In the meantime, three letters have already been requested by the banks, which were discussed at their meeting on April 12 with RBI governor Shaktikanta Das. Firstly, the banks have sought an loan extension of another year to the evaluation of liberalised borrowers’ working capital.
Loans and accounts are currently under restructuring pressure, and banks requested to cease declaring those accounts as NPAs until the restructuring was implemented.
Finally, banks requested a one-year extension for commercial transaction dates for accounts between March 2020 and 31 March 2021. The reason is that companies have faced several disruptions over the past year and are again confronted by headwinds.
As a result of national lockouts last year, the RBI announced a loan moratorium on borrowers for three months, from 1 March 2020 to 31 May 2020. This was extended by three months ending 31 August 2020. During the six months, borrowers who opted for the loan moratorium were not required to pay loan payments.
