RBI Announces Extension of Moratorium on Term Loans by 3 Months

The Reserve Bank of India announced the extension of the moratorium on term loans by another 3 months from June 1 to August 31, 2020. RBI Governor, Shaktikanta Das made this announcement due to the extension in the lockdown. The earlier notification allowed all lending institutions to offer a three-month moratorium for payment of all instalments payable between March 1, 2020, and May 31, 2020.

They clarified that the moratorium/deferment will not be treated as changes in terms and conditions of loan agreements. Due to the financial difficulty of the borrowers and, will not result in asset classification downgrade.

Other Announcements are:

(1) Small Industries Development Bank of India (SIDBI) – Another 90 days extension for the 90-day term loan facilities will be offered. In order to provide greater flexibility to SIDBI in its operations.

(2) Foreign Portfolio Investors (FPI) – Additional three months will be allowed to FPI to fulfil the condition that at least 75% of allotted limits be invested within three months. This is under the Voluntary Retention Route (VRR).

(3) Exports – The maximum permissible period of pre and post-shipment of credits is increased from 1 year to 15 months. This is done to give a boost to exports.

(4) EXIM Bank – To extend a line of credit of ₹15,000 crores to the EXIM Bank for a period of 90 days from the date of availing with rollover up to a maximum period of one year so as to enable it to avail a US dollar swap facility.

(5) Imports – Extension of Time for Payment for Imports from 6 months to 12 months from the date of shipment for such imports. Which is made on or before July 31, 2020.

(6) Working Capital – Lending institutions are being permitted to restore the margins for working capital to the origin level by March 31, 2021.

(7) Asset Classification – The rescheduling of payments on account of the moratorium/deferment will not qualify as a default. For the purposes of supervisory reporting and reporting to Credit Information Companies (CICs) by the lending institutions.

The moratorium on term loans & deferring of interest payments on working capital will not lead to asset classification downgrade.

(8) Resolution Timeline – Lending institutions are permitted to exclude the entire moratorium/deferment period. From March 1, 2020, to August 31, 2020, from the calculation of 30-day Review Period or 180-day Resolution Period. If the Review/Resolution Period had not expired as on March 1, 2020.

(9) Limit on Group Exposures under the Large Exposures Framework – To increase a bank’s exposure to a group of connected counterparties from 25% to 30% of the eligible capital base of the bank. The increased limit will be applicable up to June 30, 2021. This is done with a view to facilitating the flow of resources to corporates.

(10) Consolidated Sinking Fund (CSF) of State Governments – They decided to relax the rules governing withdrawal from the CSF. While at the same time ensuring that depletion of the Fund balance is done prudently. These relaxations to states will release an additional amount of about ₹13,300 crores.

CONTINUE READING

The case of Aruna Shanbaug that changed the Euthanasia laws...

0
It is my Belief that death is a friend to whom we should be grateful, for it frees us from the manifold ills which are our lot - Mahatma Gandhi. As human beings, out the umpteen desires that we have, one of them is definitely to have a peaceful death....

Justice D Y Chandrachud’s path-breaking Verdict in the Sabarimala Case of...

0
“Will the quest for equality and fraternity be denuded of its content where women continue to be treated as children of a lesser god in exercising their liberties in matters of belief, faith and worship? Will the pursuit of individual dignity be capable of being achieved if we deny...

After repealing section 377, its time to Legalise Same-Sex Marriage in...

0
A draconian, archaic law that criminalized homosexuality was struck down in a historic judgment given by the Supreme Court in 2018. Two years after the judgment, the LGBTQ (lesbian, gay, bisexual, transgender, and queer) community has now sought legal recognition of their relationships. As the social stigmas surrounding the LGBTQ...

Modern Day Book Burning a.k.a Internet Shutdowns

0
The internet has become an indispensable element in our society for all the obvious reasons. For the majority of users, not a single day goes by where we don't 'need' the internet and the lack of a reliable and fast connection can feel paralyzing. An internet shutdown refers to...

Letter to UNHRC – Dr Kafeel Khan, Punished Because He’s Muslim

0
Kafeel Khan, a doctor by profession and a social activist has been targeted by Yogi Government since 2017, in 3 years he had been maliciously arrested 3 times & imprisoned for around 14 months on the false charges set up against him at many instances. Now he is absolved...

Prison Life In India and its Aftermath

0
Everyone prays to never see the bars of prison in their lifetime. Yet, as fickle as life is, it is quite hard to predict the future. It is in everyone’s benefit to know a little bit about prison life; for movies and cinemas do not do justice to the...