COVID-19 Regulatory Forbearance Clarifications

We made an attempt to provide detailed clarification of the regulatory measures announced by RBI to mitigate the burden of debt servicing brought about by disruptions on account of COVID-:

(A) Rescheduling of Payments – Term Loans and Working Capital Facilities

1. In respect of all term loans (including agricultural term loans, retail ie home loans, personal loans, education loans, auto loans, LAP, consumer durable loans and any loans which have a fixed tenure. and crop loans), Banks and NBFCs are permitted to grant a moratorium of three months on payment of all instalments¹falling due between March 1, 2020 and May 31, 2020.

-The repayment schedule for such loans along with the residual tenor, will be shifted by three months after the moratorium period.

-Kindly note that EMI’s are not waiver and interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period and only the repayment is extended in terms of the tenor.

-Credit cards are also covered in the above.

2. In respect of working capital facilities (cash credit/overdraft), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020 (“deferment”). The accumulated accrued interest shall be recovered immediately after the completion of this period.

The interest for March, April, & May can be recovered from 1^st June onwards.

1. B) Easing of Working Capital Financing

1. For working capital facilities lending institutions may recalculate the ‘drawing power’ by reducing the margins and/or by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected up to May 31, 2020 .

-The availability of this relief depends on the internal assessment of the bank satisfying themselves that the same is necessitated on account of the economic fallout from COVID-19.

-RBI on its part will review such relaxations to check that they are not being misused by the Bank.

(c) Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA)

1. The above relaxations will not be treated as concession or change in terms and conditions of loan agreements due to financial difficulty of the borrower and shall not result in asset classification downgrade for banks classification or rating classification.

2. Also above, will not lead to classification into SMA and will not adversely impact the credit history of the beneficiary borrowers.

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