Mumbai: The Reserve Bank of India (RBI) is likely to extend the moratorium on bank loans by another 90 days with lockdown getting extended to mid-May and industry associations also vouching for it. Banks have informed RBI that due to the lockdown most businesses wouldn’t be restarting their operations before the end of the month and won’t be in a position to repay the accumulated interest when the present moratorium ends on May 31.
Lenders have suggested that RBI extends the moratorium for another 90 days as by then an assessment can be done on the liquidity situation existing with businesses. Lenders said that RBI has not made any commitment but is aware of the issues facing lenders in light of the extended lockdown.
RBI governor Shaktikanta Das held a meeting of chief executives of public and private sector banks in two separate sessions via video conferencing. While discussing the moratorium, RBI also reviewed the flow of credit to different sectors of the economy, including liquidity to non-banking finance companies, microfinance institutions, housing finance companies and mutual funds.
RBI has sought information from banks on the position of their international branches.
Lenders meanwhile told media that although the government has announced relaxations, over 80% of their corporate business borrowers operated in the areas classified as red zones. Given the restrictions on mobility, it was unclear if the business will resume in these areas. A CEO of a public sector bank said that private lenders have tightened their risk criteria, which resulted in many borrowers knocking the doors of public sector banks.
