Extend Moratorium Facility For All Borrowers: RBI

RBI advises several banks and financial institutions to spare debtors by extending the moratorium. Nonetheless, banks and financial institutions offer the said benefits solitary to customers who specifically request it. However, this is contrary to the RBI’s notice that emphasis that every borrower must be given this moratorium extension. Unless the insolvents precisely deny the moratorium.

Moratorium May Lead to a Liquidity Crunch in NBFCs

NBFCs and other financial companies with high credit ratios are fraught to generate liabilities abruptly. Further, due to the halt in income through interest and debt repayment they may struggle with a liquidity crisis. Besides, these NBFCs are not covered in the RBI’s circular thus, NBFCs that has borrowed from another bank will not have the moratorium extension. As a result, they are under a burden to offer benefits to borrowers from them.

RBI’s Moratorium not covering NBFCs further leading them into Liquidity Crisis

RBI’s Moratorium Ambiguity is Trouble to NBFCs

Despite RBI’s benefits circular, the NBFCs are facing hurdles as their name isn’t mentioned in the circular. Nonetheless, SBI offers NBFCs loans under targeted long-term repo operations (TLTRO) under RBI. Even though, this is not as beneficial as the moratorium extension. However, the recent release of circular specifies that the benefits involve NBFCs. But this will be exclusive as working capital loans from NBFCs are not eligible for the extension, said by Sunil Mehta chief executive of IBA. Accordingly, the sectors are seeking clarification from RBI.

SIDBI looking for clarification 

Since the issue of notice, several financial institutions are not certain of the stipulations it carries. Similarly, the Small Industries Development Bank of India (SIDBI) is not aware of whether the pending loans are a part of the moratoriu

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