The Reserve Bank today permitted banks, NBFCs (including housing finance companies) and other financial institutions to allow a three-month moratorium on payment of installments on term loans in view of the disruption caused the coronavirus outbreak. Deferment will not impact credit history of the borrower, RBI said.
Financial institutions have been allowed to shift repayment schedule and all subsequent due dates, as also the tenor for such loans, across the board by three months, in respect of all term loans outstanding as on March 1, 2020.
However, the lending institutions have to put in place a board approved policy in this regard,
"All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions") are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months," RBI said.
"The rescheduling of payments will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries," RBI added.
The RBI today cut repo rate by 75 basis points and also cut cash reserve ratio by 100 basis points. Besides that the central bank announced different measures to improve liquidity in the financial system. These measures will help lower interest rate in the overall banking system, making EMIs cheaper.
The central bank's monetary policy committee voted 4:2 majority to cut repo rate by 75 basis points. The monetary policy committee advanced its meeting, which was scheduled in first week of April.
The RBI cut reverse repo rate by a bigger margin of 90 basis points to disincentivize banks to hoard money. Reverse repo rate is the rate that at which commercial banks in India park their money with RBI for a short term.
Finance Minister Nirmala Sitharaman on Thursday announced a ₹1.7 lakh crore economic stimulus plan that provides direct cash transfers and food security measures to offer relief to crores of people hit by a nationwide lockdown triggered by the coronavirus pandemic.
The package was announced two days after Prime Minister Narendra Modi ordered the 21-day lockdown.