Clipped from: https://economictimes.indiatimes.com
The Governor also announced the further extension of three months for the deferment of interest on working capital facilities.
Providing further relief to millions of small businesses in the country, the Reserve Bank on India (RBI) on Friday said it is extending the earlier announced three month moratorium on term loan installments by another three months
“In view of extension of lookdown and continued disruptions on account of Covis-19, the measures announced earlier have been extended by another three months from June 1 to August 31, taking the entire period of applicability to six months,” said RBI Governor, Shaktikanta Das.
The Governor also announced further extension for the deferment of interest on working capital facilities, easing of working capital financing by reducing margins or reassessment of working capital cycles, exemption from being classified as a defaulter in supervisory reporting to credit information companies, and asset classification standstill by excluding the moratorium period of another three months.
Das added that the lending institutions are being permitted to restore the margins of working capital to their original levels by March 31, 2021. “This will make it easier for borrowers to manage their cash flow and finances in a gradual manner,” the Governor said.
Similarly, the measure for reassessment of working capital cycle is being extended to March 31, 2021. In a more significant announcement, Das said it has been decided to allow lending institution to convert their accumulated interest on working capital facilities over the total deferment period of six months into a funded interest term loan, which will be repaid during the course of the current financial year.
“We had received a lot of representations on this, where the earlier deferment of interest that the RBI had permitted – the entire accumulated interest had to be paid back to the bank in one shot. This was causing cash flow problem for borrowers, so taking this into account, we have decided to convert it to a funded interest term loan to be fully repaid by March 31, 2021,” said Das.