RBI FAQ's on loan moratorium scheme

• Overview:

RBI Governor vide Press Conference dated 27.03.2020 has discussed about various relaxation due to COVID19 Pandemic. Reserve Bank of India has allowed Banks to declare a three-month moratorium on all term loans outstanding as on March 1, 2020, as well as on working capital facilities.

The RBI announced a 3 month moratorium onall term loans outstanding as on March 1, 2020, as well as on working capital facilities.

• Eligibility of this relief? 

All term loans (including agricultural term loans, retail, crop loans and loans under Pool Purchases) and cash credit/overdraft are eligible to avail the benefits. And To avoid unnecessary paperwork the facility has been extended across the board to all the borrowers by extending repayment of term loan installments(includes interest) by 90 days.

• Applicability of rescheduling of payments under the scheme?

Applicable for all term loans in all the segments, irrespective of thesegment and the tenor of the term loans

• Effect on Interest?

Interest is not waived off and will continue to accrue on the outstanding amount.Borrower will have to pay additional interest for three months by either increasing the amount per instalment or number of instalments.

• Inclusion in rescheduling of term loans ?

a) Principal Amount:Rescheduling of principal can be done for a period of three months falling due between March 1, 2020 and May 31, 2020

b) EMI based term loans:EMIs falling due between 1st March 2020 andMay 31st, 2020 and the tenor will be extended by three months and have to be repaid during the extended period.

c) other term loans: all the installments and Interest falling due during thesame period, irrespective of the tenor of payment i.e. monthly, quarterly, half yearly annually, bullet payment etc.

Note: For term loans, where the repayment has not commenced, the interest portion for three months alone needs to be reckoned.

• Treatment of interest on the working capital facilities?

The Interest applied to cash credit/overdraft on 31st March, 30th April and 31st May 2020 must berecovered along with interest applied on 30th June 2020.

• Impact of relief by RBI on borrowers as far as reporting of default is concerned?
• Any delay in payment leads to default and gets reported to Credit Bureaus.
• For business loans of Rs. 5 Crores and above, the banks report the overdue position to RBIalso through CRILC.
• the overdue payments post 1stMarch 2020 will not be reported to Credit Bureaus/ CRILC for three months.
• No penal interest or charges will be payable to the banks.

• Criteria to avail the benefits of this RBI Scheme?

• In case if there is a disruption in your cash flows or there is loss of income.

• interest on the loans, though not mandatorily payable immediately and gets postponed by 3 months, continues to accrue on your account and results in higher cost.

• Relief Applicability on Credit Card Dues?

This RBI relief is available for credit card payments subject to :

a) the overdues in the credit card account do not get reported to the credit bureaus for a period of 3 months.
b) interest will be charged by the credit card issuer on unpaid amount.
c) no penal interest will be charged during this period.

Note: Interest rate on credit card dues are normally much higher compared to normal bank credit.

• Eligibility of NBFCs/MFIs/HFCs under the "easing of working capital?

• Not being considered under the RBI Loan Moratorium scheme.
• RBI has made provision for sufficient liquidity support to these financial intermediaries under TLTRO.

Points to be kept in Mind:

The measures stipulated by RBI on COVID- 19 Regulatory Package will not be treated as "restructuring".