RBI Governor Shaktikanta Das Says Banks Can Decide on Offering 3-Month Moratorium to NBFCs
Reserve Bank of India Governor Shaktikanta Das said on Monday that the decision to extend the three-month moratorium benefit on March 27 to the Non-Banking Finance Companies (NBFCs) is entirely up to banks. Das of the opinion that each bank has to assess its own liquidity position, capital adequacy and its own financials.
Mumbai, April 27: Hours after announcing Rs 50,000 crores Special Liquidity Facility for mutual funds, Reserve Bank of India Governor Shaktikanta Das said on Monday that the decision to extend the three-month moratorium benefit on March 27 to the Non-Banking Finance Companies (NBFCs) is entirely up to banks. The announcement to extend the three-month moratorium benefit was made on March 27 ahead of Union Finance Minister Nirmala Sitharaman's press conference.
Speaking about the latest development to wire agency Cogencis, RBI Governor Shaktikanta Das said, "We have said two things in the March 27 circular that there will be a moratorium on repayment of installments falling due during three months. The exact words are '…lending institutions are permitted to grant a moratorium of three months on payment of all installments….'. We have also said ‘….lending institutions shall frame Board approved polices for providing the above-mentioned reliefs…'." Bank Loan EMIs: RBI Recommends 3-Month Moratorium And Interest Deferment on All Loans Amid COVID-19 Crisis.
Das of the opinion that each bank has to assess its own liquidity position, capital adequacy and its own financials. He added, "What is meant by this is that each bank has to assess its own liquidity position, capital adequacy and its own financials. The banks have to take a considered call taking into account these factors. So far as RBI is concerned, there is sufficient clarity. So far as implementation is concerned, each bank has to take into account these factors and then grant moratorium."
It is to be known that Indian Banks Association held a meeting regarding the solution of the issue, however, couldn't reach a consensus on the matter. Since State Bank of India stated clearly not to extend moratorium benefit to NBFC, other banks are in a flux. Meanwhile, NBFCs unable to get relief from their lender-banks and markets are facing liquidity mismatches. Coronavirus to Impact Indian Economy Due to Global Linkage: RBI Governor Shaktikanta Das.
Earlier on March 27, RBI Governor announced that all banks, lending institutions may allow a three-month moratorium on all loans. Das said that the RBI has permitted banks to not just allow a three-month moratorium on all loans but also provide a three-month interest deferment on all loans. This came as part of the RBI's four-point plan to fight the adverse economic effects of the COVID-19 or coronavirus pandemic crisis.
(The above story first appeared on LatestLY on Apr 27, 2020 04:15 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).