News
2
Sep
2020
MSME and retail borrowers to get six month moratorium on principal repayments: Report
The RBI led moratorium relief which applied on both principal and interest payments ended on August 31, after which lenders were allowed to restructure accounts. Banks and NBFCs in tandem with the dispensation will increase the tenor of the principal repayment as part of the process for MSMEs and retail borrowers, whilst continuing receiving interest payments from customers.
MSME and retail borrowers may receive another six month moratorium relief applicable only on principal payments, said a report by The Economic Times (ET) citing sources with direct knowledge of the matter.
The RBI led moratorium relief which applied on both principal and interest payments ended on August 31, after which lenders were allowed to restructure accounts.
Banks and NBFCs in tandem with the dispensation will increase the tenor of the principal repayment as part of the process, whilst receiving interest payments from customers.
The RBI led moratorium relief which applied on both principal and interest payments ended on August 31, after which lenders were allowed to restructure accounts.
Banks and NBFCs in tandem with the dispensation will increase the tenor of the principal repayment as part of the process, whilst receiving interest payments from customers.
A senior public sector bank executive told ET said the move was to allow both MSME and retail borrowers to continue paying without any disruptions, whilst also adding banks did not want to face a situation where they did not receive interest payments, however. An NBFC head also told ET that a mechanism to club accumulated interest between March and August as part of the principal portion was being explored.
The Reserve Bank of India (RBI) had on August 6 had under a window allowed lenders to extend a resolution plan. Governor Shaktikanta Das, whilst announcing the move, said “It has been decided to provide a window under the June 7, 2019 Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures — without change in ownership — as well as personal loans, while classifying such exposures as standard assets, subject to specified conditions.”
CRISIL in a survey of 2300 NBFCs in India concluded that three of four entities were sub-investment grade. The ratings agency revealed that the sub-investment grade entities which had opted for the moratorium were undergoing through crippled cash flows, whilst higher rated companies had opted for the relief mainly to build a cushion of liquidity.
The Reserve Bank of India (RBI) had on August 6 had under a window allowed lenders to extend a resolution plan. Governor Shaktikanta Das, whilst announcing the move, said “It has been decided to provide a window under the June 7, 2019 Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures — without change in ownership — as well as personal loans, while classifying such exposures as standard assets, subject to specified conditions.”
CRISIL in a survey of 2300 NBFCs in India concluded that three of four entities were sub-investment grade. The ratings agency revealed that the sub-investment grade entities which had opted for the moratorium were undergoing through crippled cash flows, whilst higher rated companies had opted for the relief mainly to build a cushion of liquidity.