• Blogs
  • DialaBank
  • HOW BORROWERS CAN USE SECOND LOAN MORATORIUM OFFERED DUE TO COVID-19. SHOULD YOU OPT FOR IT ?

HOW BORROWERS CAN USE SECOND LOAN MORATORIUM OFFERED DUE TO COVID-19. SHOULD YOU OPT FOR IT ?

image

 

After representations that have been made before the State and Reserve Bank of India pleading to approve measures like loan moratorium to cope up with the economic strain faced by maximum borrowers at the time of the covid-19 pandemic hit for the second time. The Government came up with some initiatives that can eradicate the economic stress confronted by most individuals. Banks and NBFCs handled the difficulties in generating finance for the masses. So, the Reserve Bank of India took some initiatives to realize the economic problem and provide some assistance like improving the loan to value ratio for gold loans and loan restructuring schemes.

 

Numerous measures are adopted by the government to cope up with the second wave of covid-19 and one among them is the facility of a second loan moratorium as proclaimed by the RBI Governor this year. This restructuring framework is named Resolution Framework 2.0 as per the Reserve Bank of India. Borrowers of every category like individuals, small businessmen, MSMEs having disclosure up to Rs 25 crore who has not used restructuring under any prior frameworks are qualified under Resolution Framework 2.0. In the year 2020 resolution Framework, 1.0 was inaugurated as per government initiatives, for borrowers to get over the financial crises caused by the nationwide lockdown due to covid-19, which ceased in the month of December 2020. Defaults made by borrowers on reimbursement of loans like Home Loan or Personal Loan results in increased cost of interest and liabilities and also puts a negative impact on one's credit history and diminishes the future creditworthiness of the borrower. Moratorium rescues borrowers by maintaining their credit score unharmed even when they make default, and further gives restructuring of loans for a specified duration of time. The new moratorium policy declared by the Central Bank has brought a great relaxation for the people who can avail themselves. But the basic eligibility for this is that one should not make any default on loan repayment till the 31st of March, 2021.

 

Before the Central Bank allowed moratorium as a part of a restructuring it was extended up to 3 months from March 1st to May 30th in the year 2020. And tan again it was extended to 31st August 2020 and later as per regulations imposed for two years after consultation with the creditor. Those who are eligible to get a new moratorium will get an additional 2 years’ time, including the period utilized in the first moratorium availed by them in the year 2020. Eligible borrowers of any category are now authorized to obtain this facility to alter the restructuring of their loan to the extent of an increased period of 2 years but the other conditions will continue to be the same. Reserve Bank of India has given the power to customers to address their creditors for loan restructuring till September 30th 202, and if the borrower applies for the new moratorium the lender will have to carry it out within three months if all the conditions are thereby fulfilled. this restructuring scheme can be availed by borrowers of any loan from any bank for example SBI Home Loan, HDFC Personal Loan, ICICI Glod Loan, Axis Bank Car Loan, etc. The RBI has declared to provide Rs 50,000 crore aid to banks for giving fresh credits to entities like importers, manufacturers, and suppliers of vaccines; medical devices manufacturers; hospital and dispensaries; pathology laboratories; importer of covid related drugs and vaccines; manufacturers and suppliers of oxygen and ventilators; logistic farms and for the medication of patients. Loans accessible to the entities will have a repayment duration of three years and can be received at a repo rate available till 31st March 2022. RBI has further adopted initiatives to meet with the Bankers and NBFCs to communicate the economic situation and thereby finding out the best possible manner to handle the same.

Comments