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The <keyword id="6354977" type="ORGANIZATION" weightage="20" keywordseo="Supreme-Court">Supreme Court</keyword> Tuesday deferred to November 5 the hearing on a batch of pleas relating to charging of interest on interest by banks on EMIs which were not paid by the borrowers who availed of the RBI <keyword id="6840678" type="UNKNOWN" weightage="20" keywordseo="loan-moratorium">loan moratorium</keyword> scheme in view of the COVID-19 pandemic. The <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> and the Finance Ministry have already filed separate additional affidavits in the apex court saying that the banks, financial and non-banking financial institutions will credit into the accounts of eligible borrowers by November 5 the difference between compound and simple interest collected on loans of up to Rs 2 crore during the <keyword id="117489" type="PERSON" weightage="20" keywordseo="moratorium">moratorium</keyword> scheme period. A bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah was requested by Solicitor General Tushar Mehta that the hearing in the loan moratorium case be deferred as he would be busy arguing on behalf of the Centre in other matter relating to the Central Vista project. "These moratorium matters were listed yesterday but they came up today. I am requesting for an adjournment considering I have a case (Central Vista) where I will be arguing" the law officer said. A letter seeking deferment of the hearing in the case was also circulated by advocate-on-record Anil Katiyar for the Centre to the parties and the bench. The top court acceded to the request and adjourned the hearing on pleas including the one filed by Gajendra Sharma on November 5. The pleas pertained to charging of interest on interest by banks on EMIs which have not been paid by borrowers after availing the loan moratorium scheme of RBI during March 1 to August 31. Earlier, the RBI had filed the affidavit saying that it has asked all banks, financial and non-banking financial institutions to take "necessary actions" to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the moratorium scheme. Prior to this, the central government had told the apex court that lenders have been asked to credit into the accounts of eligible borrowers the difference between compound and simple interest collected on loans of up to Rs 2 crore during the RBI's loan moratorium scheme by November 5. The government had said that the ministry has issued a scheme as per which lending institutions would credit this amount in the accounts of borrowers for the 6-month loan moratorium period which was announced following the COVID-19 pandemic situation. On October 14, the apex court had observed that the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme and had said that the common man's Diwali is in the government's hands. The RBI had on March 27 issued the circular which allowed lending institutions to grant a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31,2020, due to the pandemic. Later, the moratorium was extended till August 31 this year. SEE ALSO: <a href="https://www.businessinsider.in/thelife/personalities/news/prajakta-koli-aka-mostlysane-advice-for-content-creators-on-the-fine-line-between-brand-collaborations-and-staying-honest-on-social-media/articleshow/79013162.cms">Prajakta Koli aka MostlySane’s advice for content creators on the fine line between brand collaborations and staying honest on social media</a> <a href="https://www.businessinsider.in/business/ecommerce/news/flipkart-acquires-gaming-startup-mech-mocha-as-it-looks-to-tap-the-social-gaming-space-for-more-consumers/articleshow/79014466.cms">Flipkart acquires gaming startup Mech Mocha as it looks to tap the social gaming space for more consumers</a> <a href="https://www.businessinsider.in/india/news/covid-19-vaccine-updates-pfizer-moderna-to-roll-out-covid-19-vaccine-by-december/articleshow/78924143.cms">COVID-19 vaccine tracker: German CureVac shows an immune response, Aspen Pharmacare and J&amp;J sign pact to make vaccine in South Africa</a>

Supreme Court verdict on loan moratorium case deferred to November 5

Kolkata, May 7 () Srei Infrastructure Financechairman Hemant Kanoria on Thursday welcomed SBI's decision toextend moratorium to NBFCs, but said the need is of one-timerestructuring of loans.State Bank of India (SBI), the country's largestlender, has decided to extend the RBI-approved moratorium tothe cash-strapped NBFC sector to help them tide over thecrisis.The RBI has allowed banks to extend moratorium toborrowers of term loans of all kinds for three months --March, April and May."Three months moratorium is not going to help as itwill end in May and economic activity is yet to pick up in thecountry," Kanoria told ."What we basically need is that there should be one-time restructuring of loans of all the borrowers, includingNBFCs, based on their future cash flow," he added.SBI would extend the moratorium to the Non-BankingFinancial Companies (NBFCs) on a case-to-case basisafter assessing their cash budgets and examining the need forextending it. dcSOM SOM

One-time restructuring of loans needed: Srei chief on SBI's moratorium offer

Mumbai, May 22 () The steps announced by the Reserve Bank of India including reduction in repo rate and extension of moratorium on term loans for another three months will help in quick revival of the economy, State Bank of India chairman Rajnish Kumar said. The RBI on Friday slashed repo rate by 40 basis points to 4 per cent. The central bank extended the moratorium period for the repayment of loans by another three months till August 31, 2020, and also increased bank exposure to corporates to 30 per cent of the group's net worth from the current limit of 25 per cent. "The entire effort of the government and the RBI is to revive the growth in the economy and at the same time recognising the difficulties that industries are facing. All the measures around reduction in repo rate, moratorium and increase in the limit on group exposures will be helpful in revival of the economy," Kumar told reporters through a video call on Friday. The measures are a calibrated response to the situation which is emerging on account to the disruptions caused due to COVID-19, he said. Kumar said, so far, 20 per cent of the SBI borrowers have opted for the three-month moratorium. He said the extension of moratorium on repayment of loans will be helpful to the industry. Also, with the extension of moratorium, there is no urgent need for a dispensation from the RBI. "Right now, the moratorium will take care of the situation around the cash flow disruptions. I would not be obsessed with one-time restructuring at this particular point of time when we have time till August 31," he said. Kumar, however, said banks can still go for restructuring of stressed accounts, if required, as per the June 7 circular of RBI. When asked about extending moratorium to NBFCs and housing finance companies, Kumar said that it would be given on a case to case basis. "We would decide on a case to case basis. We will have to look at their (NBFCs/HFCs) cash flows and take a decision," he said. SBI will take a decision on reduction in deposit and lending rates post the ALCO meet, Kumar said. HV MR MR

RBI measures to help revive economy: SBI Chairman

Mumbai, May 23 () State-run Bank of Baroda on Saturday said it can offer up to Rs 12,000 crore in loans to MSMEs under the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) announced by the government. Last week, Finance Minister Nirmala Sitharaman had announced a 100 per cent credit guarantee scheme worth Rs 3 lakh crore to support the medium, small and micro enterprises (MSMEs) which have been adversely affected by the coronavirus crisis. All existing MSME borrowers with outstanding credit of up to Rs 25 crore as on February 29 and with an annual turnover of up to Rs 100 crore would be eligible for funding under the scheme. "In our case, that particular portfolio amounts to be Rs 58,000 crore. So, 20 per cent of that would be around Rs 10,000 crore to Rs 12,000 crore. This, we can make available to our MSME clients in the times to come under the guaranteed scheme of the government," the bank's Managing Director and CEO Sanjiv Chadha told reporters through a video conference. The ECLGS was the second-biggest component of the over Rs 20 lakh crore comprehensive package announced by the government for the coronavirus-hit economy. Under the scheme, 100 per cent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Mudra scheme borrowers, in the form of a guaranteed emergency credit line (GECL) facility. The amount of GECL funding to eligible MSME borrowers, either in the form of additional working capital term loans (in case of banks and financial institutions) or additional term loans (in case of NBFCs), would be up to 20 per cent of their entire outstanding credit of up to Rs 25 crore as on February 29, 2020. Chadha further said under the COVID-19 emergency credit line launched in March, the bank has so far sanctioned Rs 3,000 crore in loans and disbursed Rs 1,500 crore to MSMEs. Nearly, 60-70 per cent of the bank's borrowers have availed the three-month moratorium on repayment of term loans announced in March by the RBI. "In terms of people availing the moratorium, it was around 60-70 per cent, although 90 per cent or more would have been eligible for that," he said. On Friday, State Bank of India Chairman Rajnish Kumar had said close to 20 per cent of the bank's borrowers had availed moratorium on repayment of term loan instalments. The RBI on Friday extended the moratorium for another three months to August 31, 2020. Chadha sees the number of people availing moratorium declining going forward as economic activities resume. The bank has not offered a moratorium to NBFCs but is now considering granting them the facility on a case-to-case basis, he said. "That (moratorium to NBFCs) is something which is being considered by us. We are clear that regardless of the category of borrowers, whether an NBFC, an industrial borrower, MSME or home loan borrowers, you do need to address what are very genuine requirements at this point of time," he said. "Therefore, when it comes to our NBFC borrowers, particularly the smaller ones where dependence on some banks would be little more, and where access to alternative sources of funding is not available, it (offering moratorium) becomes a simpler decision," Chadha said. According to him, the bank is well capitalised currently but may look to raise tier-1 capital to build its capital buffer. "In terms of the equity market, it is not the best time. But we could be in the market for possibly tier-1 capital over the next two months," he added. HV ABM ABM

Bank of Baroda to offer up to Rs 12k cr loans to MSMEs under credit guarantee scheme

(Eds: Replacing word 'opt' with 'avail' throughout) Mumbai, May 22 () State Bank of India chairman Rajnish Kumar on Friday said close to 20 per cent of the bank's borrowers have availed moratorium on repayment of term loans instalments. On March 27, the central bank had announced a three-month moratorium on payment of all term loans falling due between March 1, 2020 and May 31, 2020. On Friday, the Reserve Bank of India allowed banks and other lending institutions to extend the moratorium on loans by another three months -- from June 1, 2020 to August 31, 2020. "In case of State Bank of India, the percentage (of borrowers who have availed the moratorium) is very small…around 20 per cent," Kumar told reporters through a video conference. He said not all who have availed the moratorium are facing any liquidity issue. "Many of them could have serviced their loans but as a matter of strategy they would want to preserve their cash and have opted for the moratorium," he said. Kumar also advised borrowers to pay their loans if they are not facing any funding challenge. "If people are able to pay (EMIs) they should pay. If they are unable to pay then only they should take the benefit of the moratorium," he said. According to Kumar, the RBI's moratorium will take care of the cashflow disruption of borrowers and there might not be any urgent need for a dispensation of one-time restructuring of stressed accounts from the RBI. "Right now, the moratorium will take care of the situation around the cash flow disruptions. I would not be obsessed with one-time restructuring at this particular point of time when we have time till August 31," he said. He, however, said banks can go for debt recast even today as per June 7 circular of the RBI. Banks and NBFCs have been requesting the RBI to allow them for one-time restructuring of their accounts where the borrowers are facing funding issues. HV MKJ MKJ

About 20% SBI borrowers avail loan repayment moratorium: Chairman

Mumbai, May 22 () State Bank of India chairman Rajnish Kumar on Friday said close to 20 per cent of the bank's borrowers have opted for moratorium on repayment of term loans instalments. On March 27, the central bank had announced a three-month moratorium on payment of all term loans falling due between March 1, 2020 and May 31, 2020. On Friday, the Reserve Bank of India allowed banks and other lending institutions to extend the moratorium on loans by another three months -- from June 1, 2020 to August 31, 2020. "In case of State Bank of India, the percentage (of borrowers who have opted for the moratorium) is very small…around 20 per cent," Kumar told reporters through a video conference. He said not all who have opted for the moratorium are facing any liquidity issue. "Many of them could have serviced their loans but as a matter of strategy they would want to preserve their cash and have opted for the moratorium," he said. Kumar also advised borrowers to pay their loans if they are not facing any funding challenge. "If people are able to pay (EMIs) they should pay. If they are unable to pay then only they should take the benefit of the moratorium," he said. According to Kumar, the RBI's moratorium will take care of the cashflow disruption of borrowers and there might not be any urgent need for a dispensation of one-time restructuring of stressed accounts from the RBI. "Right now, the moratorium will take care of the situation around the cash flow disruptions. I would not be obsessed with one-time restructuring at this particular point of time when we have time till August 31," he said. He, however, said banks can go for debt recast even today as per June 7 circular of the RBI. Banks and NBFCs have been requesting the RBI to allow them for one-time restructuring of their accounts where the borrowers are facing funding issues. HV MKJ

About 20% SBI borrowers opt for loan repayment moratorium: Chairman

<ul><li>The Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report.</li><li>On Sunday, the National Disaster Management Authority (NDMA), the nodal department, announced lockdown 4.0 till May 31 to check the spread of the novel coronavirus </li><li>In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020. </li></ul>With the government extending the nationwide lockdown up to May 31, the Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report. On Sunday, the National Disaster Management Authority (NDMA), the nodal department, announced lockdown 4.0 till May 31 to check the spread of the novel coronavirus. The lockdown was first announced by Prime Minister Narendra Modi on March 24 for 21 days in a bid to combat the COVID-19 pandemic. It was first extended till May 3 and again till May 17. In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020. "With the lockdown now extended up to May 31, we expect RBI to extend the moratorium by three months more," SBI's research report- Ecowrap said. The report said the moratorium for three more months will imply that companies need not pay till August 31, 2020, and this means that there is almost minimal possibility of companies being able to service their interest liabilities then in September. Failing to repay the interest liabilities will mean the account might be classified as non-performing loans as per the RBI norms. "Thus, the RBI needs to give operational flexibility to banks for a comprehensive restructuring of the existing loans and also a reclassification of 90 day norm," the report said. The RBI's June 7 circular is stringent and gives little flexibility to banks. "The revised restructuring norms should give banks to restructure like say converting interest liabilities up to March 2021 into term loans, repayable in 3-5 years for working capital and at the end of the tenor in case of term loans," the report said. RBI also needs to also clarify whether working capital expansions classify as COVID-19 debt, it said.

RBI may extend moratorium on repayment of loans for three more months: Report

New Delhi, Apr 1 () Three-month moratorium on EMI payments offered by banks is unlikely to bring much relief to borrowers hit by COVID-19 lockdowns as they will have to bear the extra cost of interest charged by lenders and a longer repayment period, according to experts. Experts feel that the three-month moratorium on repayment on loans to help people fight the impact of coronavirus seems to be benefiting banks rather than borrowers as they will have to pay accumulated interest through increased number of EMIs. It is an expensive proposition for any borrower to opt for three-month suspension as announced by the RBI under the relief measures to mitigate the hardship of those hit by the outbreak of COVID-19 pandemic. Last Friday, the RBI had announced that all term loans, including retail and crop loans and working capital payments, will be covered by the three-month moratorium. Banks will now have discretion in deciding the limits on working capital, with the RBI saying that no payment miss should be considered a default and reported to credit information companies. It seems like a double whammy for borrowers as on one side income has been hit due to COVID-19 pandemic and on the other hand, there is a threat of increased tenure if they opt for RBI relief measure. SBI managing director C S Setty said it has two components- people who have term loans and the business units that have working capital loans. "In the case of term loans, the RBI has clarified that the instalments, which includes principal as well as interest, where the instalments are falling due between March 1 and May 31, will be deferred for three months. "So, in a term loan where the instalments are deferred and interest is also deferred means it is to be back ended. No point in again loading the term loan interest right away after three months, which customers would find it difficult," he said. So, what SBI is doing is that these three monthly installments that are falling in this period, will be back ended at the end of the repayment period, he said, adding, any deferment of interest over such long period, if it is there, will entail additional costs because it is not interest waiver, it is interest deferment. The accrued interest will be collected by the lender in the form of additional EMIs from those borrowers who opt for three months moratorium. "We have been telling our customers through social media that if you have the ability and cash flow to pay, it makes sense to pay this amount to avoid the cost. But, the important thing is if you want additional cash flow, you avail this facility, and it costs you," he added. In case of working capital, he said, three months interest will not be applied to the account but it will be applied immediately after the three months. In a note to customers, SBI said, "Interest shall continue to accrue on the outstanding portion of the term loan during the moratorium period". Explaining the financial burden with the help of an example, SBI said for a home loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be approx Rs 2.34 lakh equal to eight EMIs for those borrowers who opt for the moratorium. "For an auto loan of Rs 6 lakh with a remaining maturity of 54 months the additional interest payable would be Rs 19,000 approx equal to additional 1.5 EMIs". Releasing frequently asked questions (FAQ) Indian Banks'' Association (IBA) said that borrowers whose incomes have not been impacted should pay their EMIs in time. "You may take the benefits under this (RBI) package if there is a disruption in your cash flows or there is loss of income. However, you must take into account that the interest on the loans, though not mandatorily payable immediately and gets postponed by 3 months, continues to accrue on your account and results in higher cost," IBA, an association of banks, said. To give you a perspective, it said, "suppose your loan outstanding is Rs 1,00,000 and you are charged 12 per cent rate of interest on your loan, then every month you are liable to pay Rs 1,000 as interest. In case you opt not to service the interest every month, you are liable to pay interest at 12 per cent per annum, and accordingly you will pay Rs 3,030.10 at the end of 3rd month". Similarly, in case the interest rate is 10 per cent, you are required to pay Rs 833 per month, or Rs 2,521 after three months, it added. Concerning credit card dues, IBA said, there is a requirement to pay a minimum amount and if it is not paid the same gets reported to Credit Bureaus but in view of the RBI circular, the overdue in the credit card account do not get reported to the credit bureaus for a period of three months. "However, interest will be charged by the credit card issuer on unpaid amount. You should check from your card provider to arrive at interest payable. Although no penal interest will be charged during this period, you must remember that the interest rate on credit card dues are normally much higher compared to normal bank credit and you should take a decision accordingly," it said. PNB Housing Finance said that there will be an increase in balance tenure by three months and a possible rise in EMIs for those customers opting for the moratorium. DP HV CS ANZ MRMR

EMI moratorium: Borrowers unlikely to get significant gains; banks to charge interest later

New Delhi, Mar 30 () Markets regulator Sebi on Monday asked credit rating agencies not to consider as default any delay in payment of interest or principal loan amount arisen solely due to the nationwide lockdown conditions. The move follows a three-month moratorium on payment permitted by the Reserve Bank of India to mitigate the burden of debt servicing due to disruptions caused by the coronavirus pandemic and to ensure continuity of viable businesses. In a circular, the Securities and Exchange Board of India (Sebi) said a differentiation in treatment of default, on a case to case basis, needs to be made as to whether such default occurred solely due to the lockdown or loan moratorium. "Based on its assessment, if the credit rating agency (CRA) is of the view that the delay in payment of interest or principal has arisen solely due to the lockdown conditions creating temporary operational challenges in servicing debt, including due to procedural delays in approval of moratorium on loans by the lending institutions, CRA may not consider the same as a default event," Sebi said. This will also be applicable on any rescheduling in payment of debt obligation done by the issuer, prior to the due date, with the approval of investors or lenders, it added. The relaxation has been extended till the period of moratorium given by the RBI. In addition, the regulator has also given relaxations to rating agencies from certain disclosures requirements. Considering that the CRAs are dependent on issuers and third parties for information collection which may be impaired due to current lockdown, Sebi has given relaxation from timelines for rating action or issue of press release by rating agencies. However, CRAs should endeavour to finish the exercise on a best effort basis. Such cases will be put up for ratification by the rating sub-committee of the board of CRAs. Further, an extension of 30 days has been granted for making annual and semi-annual disclosures by CRAs on their websites for the periods ending March 31, 2020. SP BJBJ

Don't consider lockdown-related loan repayment delays as default: Sebi to credit rating agencies

Mumbai, Mar 31 () With many getting payment reminders, confusion prevails among borrowers, term-plan investors and credit cardholders over the implementation of the three-month moratorium on all loan repayments amid disruptions caused by the coronavirus outbreak. As part of measures to alleviate hardships faced by people, the Reserve Bank, on March 27, announced a slew of steps, including a three-month moratorium on loan repayments. Many borrowers, credit cardholders and mutual fund investors have received SMSes from their lenders reminding them that they need to maintain sufficient balance on the due date. Among others, such messages have been received by people who have taken personal, auto and home loans. An SBI Cards customer from the city received an SMS on Sunday asking him to pay the minimum balance for payment on the annual charge even though the person is yet to activate his credit card. On Saturday, a Navi Mumbai homemaker who has a monthly investment plan from ICICI Lombard received a message asking her to maintain the EMI amount in the bank account. On Sunday, her husband got a call from his insurance broker regarding payment towards a plan taken from HDFC Ergo. An American Express credit card customer from the city also received a payment reminder on Monday. When contacted, a public sector bank official admitted that such messages are being sent to customers as the moratorium decision has to be approved by the board of each lender but in many cases, the board meetings have not taken place due to the nationwide lockdown. According to a banker, customers would have to inform their banks that they want to avail the benefit of the moratorium. "Wherever there is a standing instruction, the customer has to inform the bank that he or she wants EMIs to be deferred. Otherwise, instalments will be deducted," a senior public sector banker said. RBI has taken a slew of measures, including a 75-basis points cut in the repo rate, in the wake of the situation arising out of the outbreak of coronavirus, which has infected more than 1,250 people and has claimed over 30 lives so far in the country. There is also a three-month moratorium on payments on all types of loans and lenders have been directed not to treat such non-payments as NPAs or make bad loan provisions for them. The regulator has asked credit information bureaux not to report non-performing assets during the moratorium period. Another senior banker told that the moratorium should not be seen as a kind of write-off. "This is not a loan write-off by the government. This is just an option to delay the payments for those customers whose jobs have been affected due to the lockdown or salaries been delayed because of the same. "Ultimately, each customer has to clear his or her dues and even the interest component of the three EMIs (Equated Monthly Installments) during the moratorium period will accrue to the principal," the banker said. BEN HV RAM

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