RBI extends moratorium on loans for another 3 months till August
As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity. The EMI payments will restart only once the moratorium time period expires on August 31.
Reserve Bank Governor Shaktikanta Das on Friday extended the moratorium on payment of loans by another three months till August to provide much-needed relief to borrowers whose income has been hit due to the coronavirus crisis.
In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020.
Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, were shifted across the board by three months.
As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts, providing much-needed liquidity.
The EMI payments will restart only once the moratorium time period expires on August 31.
Also, interest accumulated for the six-month moratorium period can be converted into a term loan, Das said.
Further, bank exposure to corporates has been raised to 30 percent of the group's networth from the current limit of 25 percent, a move that will allow lenders to give larger loans to companies.
In its first official forecast for economic growth, the central bank has said the gross domestic product (GDP) is likely to contract in FY21 (April 2020 to March 2021).
Das said the inflation outlook is highly uncertain due to the outbreak of the COVID-19 pandemic and expressed concern over elevated prices of pulses.
He also said there is a need to review import duties to moderate prices.
Headline inflation may remain firm in the first half of the year and may ease in the second half. Inflation may fall below 4 percent in the third or fourth quarter of the current fiscal, according to the Governor.
This is the second straight cut in interest rates in two months. On March 27, RBI had cut interest rates by 75 basis points.
"After extensive discussions, the MPC voted unanimously for a reduction in policy repo rate and for maintaining the accommodative stance of the monetary policy as long as necessary to revive growth and to mitigate the impact of COVID-19 while ensuring that inflation remains within the target," Das said.
The central bank will remain vigilant and in battle readiness to address dynamics of unknown future arising from COVID-19 outbreak, he added.
(Edited by Kanishk Singh)
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