Issuing the detailed instructions on the moratorium announcement later in the day, the RBI said, “The instalments include payments falling due from March 1 to May 31 such as the principal and/or interest components; bullet repayments; equated monthly instalments; and credit card dues.”
It also said the repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
Term loans and working capital facilities include all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India financial institutions, and NBFCs (including housing finance companies) are permitted to grant a moratorium of three months on payment.
In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lenders are permitted to defer the recovery of interest applied in respect of all such facilities during the deferment period.
“But the accumulated accrued interest shall be recovered immediately after the completion of this period,” the RBI said.
In regard to working capital facilities to borrowers facing stress on account of the economic fallout of the pandemic, lenders may “recalculate the drawing power by reducing the margins and/or by reassessing the working capital cycle.”
But the relief shall be available for all such changes effected up to May 31, and shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from the pandemic.
Accounts provided relief shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout.
On the NPA classification or special mention account (SMA) and non-performing assets, the RBI said, “since the moratorium/deferment/recalculation of the ‘drawing power’ is being provided specifically to enable the borrowers to tide over economic fallout of the pandemic, the same will not be treated as concession or change in terms and conditions of loan agreements due to financial difficulty of the borrower under prudential framework for resolution of stressed assets) directions of 2019 dated June 7, 2019.
“Consequently, such a measure, by itself, shall not result in asset classification downgrade,” the RBI said, adding the asset classification of term loans which are granted relief shall be determined on the basis of revised due dates and the revised repayment schedule.
“Similarly, working capital facilities where relief is provided, the SMA and the out of order status shall be evaluated considering application of accumulated interest immediately after the completion of the deferment period as well as the revised terms,” it said.
Also, the payment rescheduling, including interest, will not qualify as a default for supervisory reporting and reporting to credit information companies by the lenders.
CICs have been asked to ensure that actions taken by lending institutions pursuant to the above announcements do not adversely impact the credit history of the beneficiaries.
From the operational side, the lenders shall frame board-approved policies for providing the above-mentioned reliefs to all eligible borrowers, inter alia, including the objective criteria for considering reliefs.
Wherever the exposure of a lending institution to a borrower is Rs 5 crore or above as of March 1, 2020, the bank shall develop an MIS on the reliefs provided to its borrowers which should include borrower-wise and credit-facility wise information regarding the nature and amount of relief granted.