New Delhi, May 22 (IANS) In a big relief to the corporate sector the Reserve Bank of India on Friday allowed a three-month extension of moratorium on payment of instalment with respect to all term loans outstanding on March 1, 2020.
The moratorium, as announced by RBI on March 27, was ending on May 31. This has been extended till August 31 now.
The apex bank also announced further deferment of interest payment on working capital loans by another three months till August end. This would cover all outstanding as on March 1, 2020.
Deferment of interest payment and instalment of term loans has been one of the demands of the India Inc.
Due to extreme conditions presented by the spread of the pandemic, it will allow companies to continue with their investment plan to tide over the current situation without bothering about loans turning into NPAs.
For banks, which faced financial stress in last few months, the move would not add up to their woes as RBI has taken enough measures to infuse liquidity in the banking system.
The moratorium on loan repayment will cover all commercial banks, including regional rural banks, small finance banks, and local Indian banks, cooperative banks, All India financial institutions and NBFCs, including housing finance companies and micro finance institutions.
Das said that while interest payment on working capital loans is being deferred the accumulated interest for the period can now be paid in instalments till the end of FY21.
Briefing the media earlier, the Governor noted that the global economy has been severely impacted by the outbreak of the coronavirus and the pandemic has crushed demand.
He said that the pandemic has dealt a crushing blow to the demand. "High frequency indicators points to collapse in demand in March," the Governor said.
Showing faith and confidence on the resilience of the Indian economy, Das, however, added: "We have faith on the Indian economy."
He announced a 40 basis points repo rate cut on Friday, in a bid to boost liquidity.