New Delhi, March 27: The Reserve Bank of India decided to hold back the instalments on term loans for three months. This brings a huge relief for term loan borrowers like home loan, car loan and all retail loans, as the country is under lockdown with curfew imposed in certain districts the economic activities have halted.
RBI Governor Shaktikanta Das said, “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.”
He added, “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 delay in the EMIs to be allowed will be a big relief for the banks and borrowers by avoiding large number of defaults as retail lending had been the only avenue for banks to lend in the current stressed enviroment including pre-Covid-19 term outbreak.
Finance Minister Nirmala Sitharaman said “Appreciate RBI Governor’s reassuring words on financial stability. The 3 month moratorium on payments of term loan instalments (EMI) & interest on working capital give much-desired relief.”