The six-month period of loan moratorium expires on August 31
With the moratorium on repayment of bank loans set to expire on Monday, the Reserve Bank of India (RBI) is unlikely to give an extension to the scheme, news agency PTI reported, quoting sources. The loan moratorium was announced beginning March 1, 2020, to help businesses and individuals tide over the strain in their pockets amid the outbreak of COVID-19 pandemic. The six-month period of the moratorium is now set to be over.
However, the issue has met with deliberations with individual petitioners approaching the court, asking for extension of the scheme till the end of the year. On the other hand, several bankers, including HDFC Ltd Chairman Deepak Parekh and Kotak Mahindra Bank Managing Director Uday Kotak, have asked RBI Governor Shaktikanta Das not to extend the moratorium as many are apparently taking undue advantage of the facility.
Sources quoted by PTI said that as the economic activities gather pace, continuation of temporary measures would not be sufficient in addressing cash flow problems of the borrowers. So, the central bank is looking to rebalance the debt burden of borrowers and has therefore announced the loan restructuring scheme.
Recently, the RBI Governor said that while the moratorium on loans was a temporary solution in the context of the lockdown, the resolution framework is expected to give durable relief to borrowers facing COVID-19-related stress.
Meanwhile, Supreme Court (SC) on Friday said that it will hear a fresh plea seeking extension of the scheme. Vishal Tiwari, the lawyer who had filed the plea told the 3-judge bench, headed by Justice Ashok Bhushan that the adverse impact of the pandemic over financial situation was still there and hence, the moratorium scheme needed to be extended further till year end. Now, the plea will be heard alongside the one filed by Agra resident Gajendra Sharma which is scheduled for hearing on September 1.
