Loan moratorium should not be extended beyond August 31: SBI Chairman Rajnish Kumar

Echoing the views of HDFC Ltd Chairman Deepak Parekh, SBI Chairman Rajnish Kumar said the loan moratorium should not be extended beyond August. “Most bankers, myself included, believe there is no need for a moratorium beyond August 31. We believe that six months is long enough to allow non-repayment,” did he declare.

Deepak Parekh, in a meeting with Reserve Bank of India Governor Shaktikanta Das via video conference this week, had said that some were exploiting the moratorium and that it should not be extended as it will hurt small shadow banks in the country.

“Please do not extend the moratorium. We are seeing that even people who have the ability to pay, whether businesses or individuals, are taking advantage of this and postponing payment. We are hearing that “It’s about extending the moratorium. It’s going to hurt and hurt smaller NBFCs,” he said Notably, many NBFCs have offered a moratorium to their customers, but they’re not getting the same support banks from which they borrowed.

The RBI Governor, however, refused to make any commitments at Parekh’s request. “I’ve noted the suggestion. I won’t be able to comment now,” he said. In May, the RBI extended the moratorium on repayment of all term loans for another three months until August 31 to help borrowers. The decision was taken after the central bank authorized a three-month moratorium on the repayment of all term loans due between March 1 and May 31.

Currently, the banking sector’s Rs 40 lakh crore pound is under moratorium, which includes both retail and term lending to the corporate sector. It is likely that some NPAs come from the book on the moratorium.

The Ministry of Finance has begun consulting various industry leaders and banks on the need to extend the loan moratorium beyond August, when the second three-month respite will end. The government would like to maintain the moratorium for companies in the most affected sectors such as the automotive, steel, hotel and real estate industries for another three months until November.

Meanwhile, State Bank of India today announced an 81% increase in its standalone net profit to Rs 4,189.3 crore in the April-June quarter of the 2020-21 financial year, from Rs 2,312.20 crore over the corresponding period last year. The public sector lender reported a one-time gain of Rs 1,539.7 crore in the quarter under review, the PSB said in an exchange filing.

Also read: SBI Q1 results: profit rises 81% to Rs 4,189 crore, NII rises to Rs 26,641.6 crore

Also Read: COVID-19 Pandemic Could Hit Tourism, MSMEs and Aviation Sectors Hard, Says RBI Survey

Read also: SBI comes to the rescue! MSMEs affected by coronavirus will get loans in 5 days

Also read: ‘Please don’t extend loan moratorium’: HDFC’s Deepak Parekh pleads with RBI Governor Shaktikanta Das

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