With the nation facing a cash
crunch and small borrowers not able to repay their loan dues on time, the
Reserve Bank of India (RBI) on Monday came
to their rescue by easing the norms for classifying a loan into bad.

In a
notification to banks, non-banking finance companies (NBFC), NBFC micro-finance
institutions (MFI), housing finance companies and others, the RBI said it has
received several representations for some more time for small borrowers to pay
their loan dues after demonetisation of Rs 500 and Rs 1,000 bank notes.

As a
relief to the small borrowers, the RBI has said that banks, NBFCs, housing
finance companies, NBFC (MFI) and other entities regulated by it are given
additional 60 days time before classifying a loan account sub-standard.

According
to RBI, the new norms are applicable only for dues payable between November 1
and December 31 this year.

The RBI
told banks, NBFCs, housing finance companies and others that this is a
short-term deferment of norms for classification of a loan account as
sub-standard due to delay in payment of dues owing to currency crunch.

The
central bank has categorically said the delay in payment of loan dues falling
between November 1
and December 31 should not result in restructuring of loan accounts.

Dues
payable before November 1 and after December 31 this
year will be covered by the extant instruction for the respective regulated
entity with regard to recognition of NPAs.

As per
the RBI’s notification, the additional time is available for the following
types of loans and the relevant organisation regulated by it:

Running
working capital accounts (OD/CC)/crop loans, with any bank, the sanctioned
limit whereof is Rs 1 crore or less.

Term
loans, whether business or personal, secured or otherwise, the original sanctioned
amount whereof is Rs 1 crore or less, on the books of any bank or any NBFC,
including NBFI (MFI). This shall include housing loans and agriculture loans.

Loans
sanctioned by banks to NBFC (MFI), NBFCs, housing finance companies, State
Cooperative Banks to District Cooperative Central Banks and others.

The above
guidelines will also be applicable to loans extended by DCCBs.