Banks on its own unilaterally cannot stop ECS payment due to legal issue but the customer has the option of requesting bank to stop it, Rai said.
Banks have started sensitising their branches about three months’ moratorium on all term loans, including home, auto and crop loans, to help customers in overcoming financial difficulties due to the coronavirus outbreak and subsequent nation-wide lockdown. Several banks on Tuesday said they have informed and provided their branches with the detailed guidelines on various schemes announced by the RBI recently and customers are being sent messages individually on their registered mobile number about the EMI payment. Union Bank of India Managing Director Rajkiran Rai G told PTI that branches have been informed about with respect to moratorium on all term loans.
“In case of those who have opted for ECS route for EMI deduction, customers are given the option of availing the facility by informing the branch concerned through mail or other digital medium,” he said. Banks on its own unilaterally cannot stop ECS payment due to legal issue but the customer has the option of requesting bank to stop it, Rai said. He further said the customers whose income has not been impacted are encouraged to continue payment as per the scheduled.
“As per COVID 19 regulatory package of RBI, Indian Bank allows a moratorium by deferring payment of EMI/ Term Loan Instalments & Interest/ Interest on Working Capital for 3 months w.e.f 1st March 2020,” a tweet issued by the banks said. Another public sector lender PNB said it presents relief scheme for its customers. “In view of COVID-19, it has been decided to defer payment of all installments on term loan and recovery of interest on cash credit facilities falling due between March 01,2020 and May 31 2020.”
Canara Bank tweeted, “In terms of Covid 19 – RBI package, borrowers are eligible for moratorium/ deferment of installments/EMI for Term loans falling due from 01.03.2020 to 31.05.2020 & repayment period gets extended accordingly. SMS also has been sent to customers to avail the same.”
With banks clarifying their positions on EMI moratorium, it will help clear doubts of customers who were confused after getting payment reminders from lenders. Last Friday, the RBI had announced that all term loans, including retail and crop loans and working capital payments, will be covered by the three-month moratorium. Banks will now have discretion in deciding the limits on working capital, with RBI saying that no payment miss should be considered a default and reported to credit information companies.
“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,” the RBI said. Deferred instalments under the moratorium will include principal and/or interest components, bullet repayments, EMIs, credit card dues, it said.
“Lending institutions shall frame board-approved policies for providing the above mentioned reliefs to all eligible borrowers. Wherever the exposure of a lending institution to a borrower is Rs 5 crore or above as on March 1, 2020, the bank shall develop an MIS on the reliefs provided to its borrowers which shall inter alia include borrower-wise and credit-facility wise information regarding the nature and amount of relief granted,” it said.
Following the announcement, the banks just had one working day to finalise the details and issue instructions to branches, a senior official of another public sector bank said. As soon as finer points on implementation of moratorium came from the Reserve Bank, the official said, board approval was sought as per the direction of the central bank and necessary instructions have been issued to staff regarding their implementation.
Yesterday, the Agriculture Ministry said that farmers will continue to get short-term loan of up to Rs 3 lakh at a subsidised interest rate of 7 per cent, and prompt repayers will get it at four per cent as the government extended the subsidy to banks till May 31. The decision, which are implemented through banks, comes as many farmers are not being able to go to banks for payment of their loan dues on account of restrictions imposed due to the lockdown. Besides, FAQ are expected to be issued by Indian Banks Association on the various measures announced by the Reserve Bank to the benefit of customers.