Covid-19: Banks affirm deferment of EMIs, interest dues for 3 months as per RBI directive

New Delhi: Public sector lenders including SBI, PNB, Bank of Baroda, Tuesday informed their customers about deferment in loan EMIs and interest dues to help them in overcoming financial difficulties due to the coronavirus outbreak and subsequent nation-wide lockdown.

While announcing the relief package last week in the wake of Covid-19, the Reserve Bank left the implementation part to be taken care of by respective banks.

Days after, banks said they have started sensitising their branches across the country about the moratorium on loans as a relief to customers who may find it difficult to keep supplementing their liabilities.

"In terms of RBI COVID-19 regulatory package, SBI has initiated steps to defer the instalments and interest/EMIs on term loans falling due between March 1, 2020 to May 31, 2020 and extended the repayment period by 3 months. The interest on working capital facilities for the period March 1, 2020 to May 31, 2020 is also deferred to June 30, 2020," country''s largest lender SBI said.

Bank of Baroda said it is providing a moratorium of 3 months on payment of all installments falling due between March 1, 2020 to May 31, 2020 for all term loans including corporate, MSME, agriculture, retail, housing, auto, personal loans etc in pursuance of the RBI COVID 19 Regulatory Package.

Punjab National Bank (PNB) tweeted: "Due to COVID-19 Pandemic, instalments/ interest due for March, April, May 2020 on term loan and working capital limit stands deferred. Term loan repayment period is being extended by three months accordingly. Contact your branch for further details."

Union Bank of India Managing Director Rajkiran Rai G told PTI that branches have been informed about with respect to moratorium on all term loans.

"In case of those who have opted for ECS route for EMI deduction, customers are given the option of availing the facility by informing the branch concerned through mail or other digital medium," he said.

Banks on its own unilaterally cannot stop ECS payment due to legal issue but the customer has the option of requesting bank to stop it, Rai said.

Among the private sector lenders, HDFC Bank and Axis Bank said they have been examining the RBI measure and will inform customers soon.

"We are actively working towards implementing the requirements of the RBI guidelines on COVID-19 Regulatory Package for offering moratorium on payment of instalments and/or deferment of interest. The customers would be informed shortly about the details and the manner of availing the option(s)," Axis Bank said in a tweet.

While HDFC Bank said it is studying the notification issued by the RBI and will communicate the details shortly.

Rai of Union Bank said the customers whose income has not been impacted are encouraged to continue payment as per the scheduled.

Another lender tweeted: "As per COVID 19 regulatory package of RBI, Indian Bank allows a moratorium by deferring payment of EMI/ Term Loan Instalments & Interest/ Interest on Working Capital for 3 months w.e.f 1st March 2020."

Canara Bank tweeted, "In terms of Covid 19 - RBI package, borrowers are eligible for moratorium/ deferment of installments/EMI for Term loans falling due from 01.03.2020 to 31.05.2020 & repayment period gets extended accordingly. SMS also has been sent to customers to avail the same."

On March 27, 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.

"The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period," the RBI said.

Similar messages were put up by Bank of India, Central Bank of India, OBC (which gets merged into PNB from April 1), Indian Overseas Bank, Syndicate Bank (merging with Canara Bank), UCO Bank and IDBI Bank among others.

Following the announcement, the banks just had one working day to finalise the details and issue instructions to branches, a senior official of another public sector bank said.

As soon as finer points on implementation of moratorium came from the Reserve Bank, the official said, board approval was sought as per the direction of the central bank and necessary instructions have been issued to staff regarding their implementation.

Yesterday, the Agriculture Ministry said that farmers will continue to get short-term loan of up to Rs 3 lakh at a subsidised interest rate of 7 per cent, and prompt repayers will get it at four per cent as the government extended the subsidy to banks till May 31.

The decision, which are implemented through banks, comes as many farmers are not being able to go to banks for payment of their loan dues on account of restrictions imposed due to the lockdown.

Besides, FAQ are expected to be issued by the Indian Banks Association on the various measures announced by the Reserve Bank to the benefit of customers.