Ebene Magazine – Banks request relief from RBI as second wave rages, plan to seek moratorium en


As rising cases take a toll on small and large businesses alike, banks are again looking to the Reserve Bank of India (RBI) for relief measures to help borrowers battle the second wave of Covid-19 and also provide some relief to bank balance sheets as they face the threat of a surge in Non-Performing Assets (NPAs).

According to sources within the banking industry, both banks, as well as the RBI, are currently trying to understand and assess the complete impact of the current situation. Fragmented lockdowns and recoveries across the countries have cast a doubt on the trajectory of the second wave and its ramifications on businesses and the economy. But, a request for moratorium is on the cards, sources added.

Sunil Mehta, the CEO of the Indian Banks’ Association told ET Now, « We are unable to spell out a moratorium request for a specific period as we are currently assessing the situation. The scenario is not clear as of now. Banks will analyse the impact of the second wave and a common opinion of all lenders will be put forth to the RBI. »  

« The issue with banks asking for a certain period of moratorium is that what if the RBI is willing to extend more relief than requested? We know that the RBI is aware of the need of the hour and we are hoping that they will take a call accordingly, » said a banker on the condition of anonymity.  

Meanwhile, banks have already requested for three relief measures via letters, and these were also discussed in the meeting between bank heads and RBI Governor Shaktikanta Das on April 12. Firstly, banks have sought an extension for the assessment of liberalised working capital for borrowers by another year.

Loans and accounts that are currently up for restructuring are under pressure, and banks have requested for a standstill on declaring these accounts as NPAs until the date of implementation of restructuring.

#ETNOWExclusive | Sources tell ET NOW that banks, as well as the @RBI, are currently trying to assess the exact impact of the second wave. Banks will seek a #moratorium after clarity [email protected] gets the details pic.twitter.com/l3rfFbN4Wt

Lastly, banks have asked for a one-year extension for accounts with commercial operation dates between March 2020 and March 31, 2021. The rationale for this request is that businesses faced multiple disruptions over the past year and are back to facing headwinds again.

Last year as the nationwide lockdown caused job losses and large-scale impact on businesses, the RBI had announced a moratorium for borrowers for three months between March 1, 2020, to May 31, 2020. This was further extended by a period of three months ending August 31, 2020. Borrowers who opted for the moratorium were not required to pay loan installments during the six-month period.

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