Loan Moratorium Extended Till December? Here’s What RBI’s Planning – No EMI, Loans For Common People?

No EMIs, loans till December? Loan moratorium extension till December? Here’s what RBI is planning for common people. While the court has already extended the loan moratorium repayment till September 28, it may eventually be extended till December, and there are multiple reasons to believe it.

Loan Moratorium Extended Till December? Here’s What RBI’s Planning – No EMI, Loans For Common People?

Recently a petition was filed in the Supreme Court seeking directions to all the banks to extend loan moratorium till December 31.

While the country is going through a rough phase, the loan moratorium extension till December will ensure the economy is able to recover and the borrowers are in a position to pay back their loans. The extension will only be applicable to EMI repayment on term loans.

SC hearing has been deferred till September 28, it’s the last order asking banks not to declare accounts as NPAs for 2 months to continue.

A special panel was announced on September 10 after the court gave the government and RBI upto September 28 to come to a concrete decision. The panel will look into the concerns raised after multiple petitions were filed seeking relief from interest levy on loan repayments deferred.

Loan Moratorium Extension: What’s RBI Planning?

The SC bench headed by Justice Ashok Bhushan deferred the hearing of the petitions till September 28 and asked the Centre and the Reserve Bank of India (RBI) to come to a final decision. Banks have been asked not to declare accounts as non-performing assets (NPAs) for two months will continue.

This means banks will not be declaring NPAs till October end, this may extend further.

The businesses are slowly regaining momentum, and the economy is getting back on its feet. While it may take some more time for the situation to get back to normal and it will probably mean the apex body may extend the loan moratorium till December.

In the last hearing, the Supreme Court has been deferred till September 28, it’s the last order asking banks not to declare accounts as NPAs for 2 months to continue.

On March 27 RBI permitted 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) to allow a moratorium of three months on payment of EMIs and installments in respect of all term loans outstanding as on March 1, 2020.

Later in May, the RBI again announced an extension of loan moratorium by another three more months to August 31.

Now whether loan moratorium extension till December will be approved or not, there are high chances it will be further extended. With SC hearing deferred till September 28, repayers are getting another additional month. NPA declaration has been extended by another two months, and hence eventually loan moratorium extension till December may happen.

Loan Moratorium Extended Till December? What To Know

The recent petition to extend loan moratorium till December 31 filed by lawyer Vishal Tiwari sought directions, till the court reopens, to all the banks to adhere to extend the loan moratorium period. This will be applicable to lawyers / service sector, transport and tourist industry, including drivers and other covered under these sectors.

The plea to defer EMI payment on term loans till December 31 ensures that the lending institutions shall not use any kind of illegal, violent, threatening or harassing methods against borrowers for the recovery of the loan installments.

If any such acts are committed by the lending institutions, the plea appeals for strict action against them in accordance with the law. Many people have lost jobs during this COVID-19 emergency and are passing through a tough financial phase.

No relief or any financial aid has been provided by the government in the shape of loan to the service sector. Several pleas as such have been filed asking the court to extend loan moratorium till December 31. As many struggle to pay off monthly loan installments, eventually the loan moratorium extension till December 31 may happen.

Government Forms Panel To Assess Waiver Of ‘Interest On Interest’

The government has set up a special panel to assess the waiver of interest, and interest on interest on loans. The panel will look into the concerns raised after multiple petitions were filed seeking relief from interest levy on loan repayments deferred. The six-month loan moratorium extension was mandated by the Reserve Bank of India. 

The panel will be chaired by former Comptroller and Auditor General Rajiv Mehrishi, Ravindra Dholakia, former professor at IIM Ahmedabad and B Sriram, former managing director of State Bank of India.

The panel will look into:

  • Measure the impact of waiver, and interest on interest on Covid-19 related moratorium.
  • Take into consideration the impact economy and India’s financial stability on interest on interest.
  • Come up with mitigating financial constraints of various sections of society, and measures that need to be adopted.
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