Loan moratorium expires August 31, RBI unlikely to extend relief


Six-month loan moratorium expires August 31

With the moratorium on repayment of bank loans set to expire on Monday, the Reserve Bank of India (RBI) is unlikely to extend the program, the PTI news agency reported, citing sources. The loan moratorium was announced effective March 1, 2020, to help businesses and individuals overcome the pressure in their pockets amid the COVID-19 outbreak. The six-month moratorium period is now over.

However, the matter has been the subject of deliberations with individual petitioners applying to the court, asking for the program to be extended until the end of the year. On the other hand, several bankers, including Deepak Parekh, chairman of HDFC Ltd and Uday Kotak, managing director of Kotak Mahindra Bank, have asked RBI Governor Shaktikanta Das not to extend the moratorium, as many are apparently taking unfair advantage of it. ‘installation.

Sources quoted by PTI said that as economic activities accelerate, continuation of the temporary measures would not be enough to resolve borrowers’ cash flow problems. Thus, the central bank seeks to rebalance the debt burden of borrowers and therefore announced the loan restructuring plan.

Recently, the RBI Governor said that if the loan moratorium is a temporary fix amid the foreclosure, the resolution framework should provide lasting relief to borrowers facing the stress of COVID-19.

Meanwhile, the Supreme Court (SC) said on Friday it would hear a new plea calling for an extension of the regime. Vishal Tiwari, the lawyer who filed the plea, told the three-judge panel, led by Judge Ashok Bhushan, that the negative impact of the pandemic on the financial situation was still there and, therefore, the moratorium program was to be extended until the end of the year. Now, the plea will be heard alongside that filed by Gajendra Sharma, a resident of Agra, which is due to be heard on September 1.

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