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Loan Moratorium
Why is it in news?
- The government clarified that that the loan moratorium introduced during the lockdown “is extendable to two years”.
Details:
- The circulars issued by the RBI have devised a framework, which allowed concessions in interest rates and it permits lenders to allow moratorium of up to two years.
- The RBI framework introduced by the circulars were specific to the pandemic situation.
- With the framework in place, banks were “fully empowered” to resolve COVID-19-related stress and customise relief to individual borrowers.
- The various available concessions included:
(1) Alteration to the rate of interest and haircut on amount payable as interest
(2) Extension of the residual tenor of the loan, with or without moratorium, by up to two years
(3) Waiver of penal interest and charges
(4) Reschedule of repayment
(5) Conversion of accumulated interest into a fresh loan with deferred payment schedule
(6) Sanction of additional loan.