In a sequel of Finance Minister Nirmala Sitharaman's tranches of the special economic package, Governor of Reserve Bank of India (RBI) Shaktikanta Das has, on Friday, held a press briefing and outlined the fresh relaxations of the Central bank as part of the stimulus amid the Coronavirus outbreak.
In his address, which lasted for 30 minutes, the Governor announced that the moratorium on loan repayments have been extended for another three months till August 31, 2020. This has become the second extension of a three-month moratorium on the loan payments and the current spell will be ending on May 31, 2020, and the extension comes when the economy has been eyeing for the trajectory to hit the revival path.
Through the announcement, the RBI has awarded six months of the moratorium from March to August and the extension would be providing huge relief to many debtors as they are not required to pay the loan installments during the moratorium period.
Three-month moratorium we allowed on term loans&working capitals we allowed certain relaxations. In view of the extension of the lockdown&continuing disruption on account of #COVID19, these measures are being further extended by another 3 months from June 1 to Aug 31: RBI Guv pic.twitter.com/YKulKb9bD0— ANI (@ANI) May 22, 2020
According to the reports, the moratorium will apply for loans like home, education, cars, and corporate loans and the repayment of credit card dues would also fall under the ambit of the moratorium as this period would grant individuals to revive from financial stress.
The Governor has announced that the RBI will provide Rs 15,000 crore as a refinance facility for Small Industries Development Bank of India (SIDBI) for 90 days. He further highlighted that the government's revenue channels have largely been impacted in the wake of the nationwide lockdown which had weakened the economic corridors. He also announced that the Central Bank cuts the repo rate by 40 points from 4.4% to 4%.
By citing that the inflation outlook is highly uncertain in the wake of the outbreak, Das stated that the industrial production has shrunk by 17% in March with manufacturing activity down by 21% and he asserted that the GDP growth in 2020-21 is expected to remain low with some surge in the second half of the year.
Extending the moratorium period is one of the key announcements made by the governor as part of the economic package as the six month EMI holiday would defer the payment of installments with having no arduous impact for the debtors on their credit score and the deferred payments in normal times will hit back with the negative impact for the debtors along with degrading their credit score.
The reports stated that the moratorium will include Equated Monthly Instalments (EMIs), Principal and Interest components, Credit card dues, and Bullet repayments- which is the lump sum payment made for the entirety of an outstanding loan amount. The Central government has announced Rs 20 lakh crore package to stimulate the growth of ailing economy amid the outbreak of the Coronavirus pandemic.