The Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to offer a three-month moratorium on loan repayment to customers who have taken term loans against their insurance policies.

The move is in line with the relief given by the RBI for all term loans by scheduled commercial banks and NBFCs in the wake of the lockdown.

“In respect of term loans, insurers are permitted to grant a moratorium of three months towards payment of instalments falling due between March 1, 2020 and May 31, 2020,” the IRDAI said, adding that the repayment schedule for such loans and also the residual tenor would be shifted across the board by three months subsequent to the moratorium period.

Plea from industry

The IRDAI is understood to have received representations from industry associations seeking moratorium on repayment of term loans sanctioned by the insurers, after the outbreak of Covid-19.

In its directive, the regulator said insurers will frame board-approved policies to extend the relief to all eligible borrowers. “Interest will continue to accrue on the outstanding portion of the term loans during the moratorium period,” it said.

The asset classification of term loans which are granted relief will be decided on the basis of revised due dates and revised repayment schedule, it said.

The IRDAI further said that rescheduling of payments, including interest, will not qualify as a default for the purpose of reporting of NPAs.

The regulator had earlier extended the benefit of grace period to customers to pay their renewal premium during the lockdown period.

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