The RBI had on March 27 announced a three-month moratorium on term loans.
FILE PHOTO: The Reserve Bank of India seal is pictured on a gate outside the RBI headquarters in Mumbai
The Reserve Bank of India (RBI) has denied a request from banks to put a stay on the asset classification norms, according to a report by The Economic Times.The central bank’s instruction could hurt companies hoping to avoid being labelled as defaulters amid the coronavirus outbreak.Companies that were already in default before March 1 are not eligible for forbearance, the RBI said in an email to the Indian Banks’ Association (IBA). In India, the spike in COVID-19 cases began after March 1.Moneycontrol could not independently verify the story.“If a borrower has been in default even before March 1, 2020, such a default cannot be said to be as a result of the economic fallout of the pandemic,” the RBI said in the email seen by The Economic Times.Follow our live coverage of the COVID-19 pandemic“The benefit of moratorium can be extended to such borrowers in respect of payments falling due during the March 1 to May 31, 2020 period,” the central bank clarified.Payments that were already overdue on or before February 29, 2020 will attract current IRAC (income recognition and asset classification) norms, the RBI stated.This means that banks will be required to classify such loans as non-performing assets (NPAs).The banking regulator had on March 27 announced a three-month moratorium on term loans.Lenders had requested that companies who have not made payments between January 1 and March 1 also be covered by this moratorium, the report said.Follow our full coverage of the COVID-19 pandemic here.Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
First Published on Apr 2, 2020 11:25 am