The repayment schedule for such loans as also the residual tenor will be shifted across the board by three months
Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period
The Reserve Bank of India today clarified that financial institutions can allow three-month moratorium on repayment of credit card dues. To provide relief to the middle class amid the disruption caused by the coronavirus lockdown, the Reserve Bank of India today allowed banks and other financial institutions to permit moratorium on three months on payment of instalments falling due from March 1, 2020 to May 31, 2020.
The repayment schedule for such loans will be shifted by three months after the moratorium period and interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the RBI clarified.
"In respect of all term loans (including agricultural term loans, retail and crop loans), 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) (“lending institutions") are permitted to grant a moratorium of three months on payment of all instalments," the RBI said.
Instalments will include principal and/or interest components; bullet repayments; equated monthly instalments (EMIs) and credit card dues," the central bank said.
The financial institutions however have to take a board approval for putting in a policy of moratorium of three months on loan repayment.
The rescheduling of loan repayments will not qualify as a default for the purposes of reporting to credit information companies (CICs) by the lending institutions. For borrowers the rescheduling of loan repayments will not adversely impact their credit history.
For lending institutions, the moratorium not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.