Banks to offer more clarity to customers on three-month loan moratorium

Banks are planning to offer more clarity to their customers on the three-month moratorium regarding term loans in the following days.

The main issues are the eligibility, type of interest to be charged and the rate at which it would be charged for those customers, who have opted for a three-month deferment of the loans due. These are expected to be decided by the boards of each bank.

“The first priority is to make sure that customers don’t lose out on the relief and inability to pay the March instalment does not change their account status,” said a bank executive, adding that issues on the rate of interest to be charged will be decided in the following days.

“Certainly, no one will try to make money in such a situation and do something which is unfair to the customer. But the system of interest to be charged will depend on bank to bank, but it has to make sense for both bank and the customer. You will see some announcements in April,” said another banker, who did not wish to be named on the issue.

Sources said that the Reserve Bank of India (RBI) could also give further clarity on these issues although bankers have not actively sought any guidance. “At this juncture everybody is waiting to see if there is more clarity coming in,” said the first executive.

With a national lockdown in place due to the coronavirus pandemic, RBI Governor Shaktikanta Das had on March 27 - as part of the monetary policy - announced that all commercial banks, co-operative banks, all-India Financial Institutions, and NBFCs have been permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1.

According to the RBI notification the repayment schedule for such loans as also the residual tenor would be shifted across the board by three months after the moratorium period. “Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period,” it had further said.

State Bank of India (SBI) Chairman, Rajnish Kumar, had told reporters that the loan installments would automatically be deferred by three months.

Customers will have the option to decide if they want to opt for the three-month deferment.

“Standard accounts as on March 1, can choose not to pay for March and not be treated as delinquent,” said the second banker, adding that this would also include credit card dues.

According to Gaurav Gupta, CEO, MyLoanCare.in, a simple or compounded rate of interest is charged will not make much difference to the customer. “The logical thing would be that the interest rate should be the same as the current rate charged on the loan. But each bank will take a call on what interest should be charged and who all will be eligible to avail it will be announced by each bank in coming days,” he said, adding that those who have the ability to continue paying their EMIs should not take the deferment facility.

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