By Shritama Bose and Ankur Mishra
The extension of several forbearance measures by Reserve Bank of India on Friday was welcomed, especially the deferral of loan repayments till end August but both banks and borrowers were disappointed no one-time restructuring of stressed accounts, without the bad-loan tag, was announced.
Lenders have also been hoping the RBI would stretch the time period for recognising a non performing asset (NPA) to 180 days, from the existing 90 days, after the due date but no such relaxation was forthcoming.
While extending the repayment moratorium, the RBI will also allow these exposures to be excluded from the asset qualification guidelines. The RBI has allowed interest on working capital facilities, to be accumulated and to be paid off by March 31, 2021 so as to make it easier for borrowers. Banks have cautioned borrowers they should use the repayment holiday only if they really need to since it would cost them more. Banks have been permitted to recalculate the ‘drawing power’ by reducing the margins until August 31and also to re-assess the working capital cycle up to March 31, 2021.
Padmaja Chunduru, MD & CEO, Indian Bank, said conversion of interest on working capital loans for the moratorium period into term loans would bring relief to borrowers, but added the time given may turn out to be insufficient. “The time period for repayment of that component could have been longer than just seven months,” Chunduru said.