How are loan moratorium rules announced by RBI in 2021 different from last year – Times Now

How are loan moratorium rules announced by RBI in 2021 different from last year

How are loan moratorium rules announced by RBI in 2021 different from last yearHow are loan moratorium rules announced by RBI in 2021 different from last year&  | &nbspPhoto Credit:&nbspBCCL

In view of the second wave of Covid-19, the Reserve Bank of India (RBI) announced the Resolution Framework (RF) 2.0, on the lines of measures announced last year, to help those hit financially by the pandemic.

While it will be a bit far stretched to the call new relief measures announced by the central bank on May 5, 2021 as ‘second moratorium’, Governor Shaktikanta Das did allow an extension of the period of the moratorium for those who availed it in 2020. Those who didn’t take the central bank’s fig leaf last year were allowed to restructure their loans if faced with financial difficulty.

Distressed borrowers who opted for a moratorium of fewer than two years under RF 1.0 can now opt for extending the same by two years.

“In respect of individual borrowers and small businesses who have availed restructuring of their loans under Resolution Framework 1.0, where the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of the moratorium and/or extending the residual tenor up to a total of 2 years. Other conditions will remain the same,” Das said.

Moratorium refers to deferring repayments that get added to the principal amount. When such as borrower begins repayments, the tenure of repayment and in some cases EMI increase.

Eligible borrowers who did not avail the facility in the first round but are facing difficulty in paying back their dues due to various Covid-19-related issues may approach their lenders for restructuring their loans.

Borrowers i.e. individuals and small businesses and MSMEs who did not avail of restructuring facility under resolution framework (RF) 1.0 announced in August 2020, and whose accounts are classified as ‘standard’ as of March 31, 2021, can avail the same. However, this is limited for borrowers with outstanding debt of Rs 25 crore or less. This means there should be no default till March 31, 2021, in order to avail of relief measures announced under RF 2.0.

Eligible borrowers including small businesses, MSMEs (micro, small and medium enterprises) and individuals who opt for restructuring under RF 2.0 till September 20, 2021. The banks are expected to implement the same within 90 days of invocation.

New guidelines under RF 2.0

While moratorium announced under RF 1.0 pertains to a blanket deferment of payments for the term of the moratorium, new measures under RF 2.0    pertain to the restructuring of loan terms to accommodate flexible repayment terms. This may include rescheduling of payments, conversion of any interest accrued or to be accrued into another credit facility, revisions in working capital sanctions, granting of moratorium based on an assessment of income streams. However, compromise settlements are not permitted.

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