Logo

Logo

SBI agrees to extend moratorium relief to NBFCs: Reports

On Saturday, RBI Governor Shaktikanta Das held a meeting of held meeting with public and private sector banks where the issue of loan moratorium was also reviewed.

SBI agrees to extend moratorium relief to NBFCs: Reports

The bank will offer a moratorium to NBFCs on repayments due between March 1 and May 31. (Photo: Getty)

With further extension of the COVID-19 lockdown, country’s largest lender State Bank of India has reportedly decided to extend the repayment moratorium period on bank loans, announced by the RBI, by three months to help the non-banking financial companies (NBFC), reports stated on Wednesday.

The Prime Minister Narendra Modi-led government on Saturday extended the lockdown by another two weeks till May 17 with certain relaxations for red, orange and green zones.

The report comes at a time when the banking sector is divided on giving relief to the NBFC sector. While some lenders are in favour of the extension, others are against granting this benefit.

Advertisement

The bank will offer a moratorium to NBFCs on repayments due between March 1 and May 31, a BloombergQuint report quoted an anonymous bank official as saying.

On March 27, Reserve Bank of India (RBI) had allowed banks and financial institutions to offer a moratorium of three months on payment of instalments of all term loans outstanding as on March 1 to help mitigate hardship faced by borrowers.

“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 and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020,” the RBI had said. However, banks decided not to extend this relief to the NBFCs, as a ‘FAQ’ in Indian Banks Association states that they are not covered under the moratorium relief.

This blockage left NBFCs at a peculiar spot. As they had to extend moratorium to their customers, but a similar relief was not given to them. This situation poses a threat of potential cashflow crunch.

But with this latest development, it seems like the SBI have to take a u-turn.

Another report on CNBC TV18 quoted an anonymous SBI official as saying, “Let NBFCs give their cash budget…and it depends if they are asking for more money also along with the moratorium or just asking for moratorium- all those decisions the bank will examine and take a call.”

The same report further clarified that the bank is not looking forward to grant a blanket moratorium relief to all NBFCs.

On Saturday, RBI Governor Shaktikanta Das held a meeting of held meeting with public and private sector banks where the issue of loan moratorium was also reviewed.

Credit flows to different sectors of the economy, including liquidity to non-banking financial companies, microfinance institutions, housing finance companies, mutual funds, etc, and post lockdown credit flows including provision of working capital, with special focus on credit flows to MSMEs were also deliberated.

The Supreme Court earlier this week directed the RBI to ensure that its March 27 guidelines directing lending institutions to allow a three-month moratorium to all borrowers is implemented in letter and spirit.

Advertisement