New Delhi, March 27: In a big announcement, the Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said that all banks, lending institutions may allow a three-month moratorium on all loans. Das said that the RBI has permitted banks to not just allow a three-month moratorium on all loans but also provide a three-month interest deferment on all loans. This came as part of the RBI's four-point plan to fight the adverse economic effects of the COVID-19 or coronavirus pandemic crisis. RBI Reduces Repo Rate by 75 Basis Points to 4.4%; Reverse Repo Rate Reduced by 90 Basis Points to 4% Amid COVID-19 Outbreak
The final decision is now on the banks to decide whether they want to allow the three-month breather to loan holders. A three-month moratorium means that the loan holders can postpone their EMIs on loans for the next three months. Read the complete text of the RBI plan and announcements here.
"All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFC (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," the RBI statement said.
It also added, "In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period."
However, the same shall not be applicable to credit card payments and interests. Credit card holders will be required to pay their dues as usual.
Meanwhile, the RBI also announced a reduction in repo rate by 75 basis points to 4.4 percent, reverse repo rate by 90 points to 4 percent. Das also announced a Rs 3.74 lakh crore liquidity induction into the system. The cash reserve ratio was also reduced by 100 basis points.
The announcements from the RBI came a day after Finance Minister Nirmala Sitharaman announced a financial package for the poor, who have been adversely affected due to the total lockdown amid coronavirus outbreak in the country. Till Friday, March 27 morning, there were 724 confirmed cases in India with 17 deaths.
(The above story first appeared on LatestLY on Mar 27, 2020 10:54 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).