The announcement made by RBI regarding loan moratorium in March is now ending on 31 August. After this, now the burden of depositing EMI will be increased from September for those customers, who till now were taking advantage of Moratorium and do not have enough funds for repair.
new Delhi. Soon after the lockdown, Reserve Bank of India Governor Shaktikanta Das announced a loan moratorium. Initially this announcement was made for three months, but on 22 May it was extended for another three months. After this decision of RBI, the obligation of giving EMI of loans for these 6 months to the customers who took loans from banks was over. But the term of Loan Moratorium ends on 31st August is now going to end on 31 August. That is, it will be mandatory for customers to fill EMI from the month of September. After the Monetary Policy Review (RBI MPC) meeting on Thursday too, Shaktikanta Das has not said anything about extending the moratorium period. However, he did announce loan restructuring.
After this, now the burden of depositing EMI will increase from September for those customers who till now were taking advantage of Moratorium and they do not have enough funds for repair. There are two types of opinions among the enlistees regarding the extension of loan moratorium by RBI. However, bankers say that restructuring facility will give more benefits than moratorium. In the past, Aditya Puri and SBI Chairman Rajnish Kumar also said the same.
Most people were taking advantage of Moratorium to save cash
Financial analyst Neeraj Bhagat cited a survey by CNBC Awaaz that 43 per cent of people with regard to the moratorium say they have a fear that cash should be saved. That is why they are taking advantage of the Moratorium. In other ways, their cash flow is fine. There are only 33 per cent people who are really short of funds and that is why they have decided to take advantage of the Moratorium.
Bhagat said that in the last one month, the economy has come into recovery mode. However, people are still having some problems. But, if the period of the moratorium is increased, the load on the customers will increase further. Apart from this, the entire financial structure will also be affected. The possibility of deteriorating the bank’s cash flow will increase. It is not in the moratorium that the bank is waiving the loan of the customers. Rather it is increasing its duration. In such a situation, unless there is a restructuring policy from the government, in which there will be a one-time weaver or if the loan is waived by a few percent, then there is a benefit. To increase the moratorium will mean problems will increase.
What is Raghuram Rajan saying?
Former RBI Governor Raghuram Rajan also says that the loan moratorium should not be extended. Rajan said, ‘When you tell people that they do not repair, then it is difficult to get the habit of repair in them again because they have no savings. They have no money.
RBI has announced loan restructuring
However, Shaktikanta Das, while continuing his efforts to revive the economy affected by the Corona virus, waived restructuring facilities for companies and personal loans. Once restructured, such loan will be considered as standard. This means that if the borrower follows the new payment structure, the borrower will not be reported to the credit bureau as a defaulter.
According to the RBI, consumer loans given to individuals in personal loans, education loans, loans given for the construction or encashment of immovable properties (eg housing loans), and for investment in financial assets (shares, debentures and so on) Loans given are included. Banks will not be required to make high provision in loss-of-profit accounts for this type of loan restructuring.
They will benefit from restructuring
According to the RBI resolution framework, the resolution of stressed personal loans will be available only to those borrowers who have not defaulted more than 30 days on 1 March 2020. Banks can give a loan extension of two years to such loans. This extension can be granted with or without any restriction on the payment of loan installment. Customers can apply for restructuring before 31 December. Banks will have to take a decision on these applications within 90 days. Banks and financial institutions will be able to extend the loan repayment period for a maximum of 2 years. They will be able to decide on the basis of the person’s income.
The RBI had an exemption for non-payment of installments under the loan moratorium. During this time, whatever interest is created, banks add to your principal money. When EMI starts, you will have to pay interest on the entire outstanding amount. That is, interest will also be charged on moratorium period. In restructuring the loan, banks will be able to decide whether to reduce the EMI or increase the loan period, only to collect interest, or to adjust the interest rate.
