Loan moratorium and NPAs
- June 5, 2020
- Posted by: admin
- Category: DPN Topics
RBI permitted banks and NBFCs to allow a further 3-month moratorium, i.e from June 1 to August 31, 2020, on the payment of installments in respect of term loans outstanding as on March 31, 2020.
According to data provided by different banks, nearly 30 per cent of their outstanding loans have come under moratorium so far, with micro-finance borrowers facing extreme stress, followed by automobile finance, MSMEs, corporate and retail loans. For some banks, this percentage is almost 70 per cent.
Impact of moratorium on banks
- Banks are likely to take a hit down the line since this is expected to significantly add to their non-performing assets (NPAs) from the second half of 2020-21.
- Banks are unlikely to face problems for the next three months as regulatory relaxations, will provide them a breather till September in recognizing NPAs.
- Post September, NPAs are expected to shoot up from the current level of around Rs 10 lakh crore, when these loans come up for repayments.