Rs 2 lakh cr will be lost if interest is waived off during loan moratorium - RBI
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The RBI has announced a sixmonth moratorium on loans repayments from March, giving borrowers the option to postpone EMIs till August, to ease the financial stress on them due to Covid-19 and the lockdown.
On Wednesday, the banking regulator told the court that the moratorium was only a deferral and not a waiver on payments. It only defers collection of loans and interest till a further point of time, which is not later than March 31, 2021, it said.
The central bank filed the affidavit in response to a court notice on a petition seeking interest waiver during the moratorium period. Since customer profiles differ, the manner or recovery of interest has been left to the discretion of the lending institutions, the RBI said.
While the RBI is making efforts to provide relief to all sectors, it doesn’t consider it prudent or appropriate to offer a forced waiver of interest, the affidavit said. Such a decision would put the financial viability of banks at risk and depositors interest in jeopardy, the banking regulator added.
The RBI said the moratorium would help reduce the immediate burden of borrowers and also take care of the effective income of banks which are commercial entities and need to sustain themselves to remain being the guardian of depositors. #casansaar (Source - RBI, Economic Times)
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