Money & Banking

With extended lockdown, lenders hope for extension of three-month loan moratorium

Surabhi Mumbai | Updated on May 13, 2020 Published on May 13, 2020

With the national lockdown extended till May 17 and chances of a further extension, many lenders are of the view that the three-month moratorium on term loans should be extended to reduce pressure on borrowers. A final decision will, however, be taken by the Reserve Bank of India.

“When the moratorium was originally announced, the lockdown was estimated till middle of April. Since then it has been extended by a month. Logically speaking, there is a case (for extension) but a holistic decision can only be taken by the government and the RBI,” said Sunil Samdani, Chief Financial Officer, Bandhan Bank.

YES Bank Managing Director and CEO Prashant Kumar had also recently expressed the hope that the RBI would consider extending the moratorium.

“Going forward, we are hopeful that the RBI will extend the moratorium and give more comfort on the interest side. Otherwise, everyone will be affected; it is not just YES Bank. Some dispensation should come,” Kumar had told BusinessLine in a recent interview.

Speaking to presspersons at the fourth quarter results call, Ajay Piramal, Chairman, Piramal Enterprises, noted that many people have said they want the moratorium to be extended, but the final decision was left to the RBI.

Micro finance players have also said the three-month moratorium should be extended by another two to three months so as to give borrowers the chance to resume their livelihoods and then start repayments.

On March 27, RBI Governor Shaktikanta Das had announced a three-month moratorium on payment of instalments in respect of all term loans due between March 1, 2020 and May 31, 2020.

However, the lockdown has since been extended, and indications are that it could be extended further in some red zones, where there have seen rising number of cases of novel coronavirus infection.

Bala Parthasarathy, co-founder and CEO, MoneyTap, however, said noted that some States have already partly opened. “Our position is that the existing moratorium is the right timeline. Only on May 17 when the lockdown is lifted, will we know the extent of the damage and the hardship faced by customers. Then, that will have to be factored in and it can be done fairly quickly,” he said.

Apart from the moratorium, the RBI has taken a number of measures to increase liquidity in the system and help borrowers tide over the economic slowdown.

Published on May 13, 2020
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