InvestorQ : Do you see the RBI EMI moratorium being extended beyond August 31?
Anamika Sodhani made post

Do you see the RBI EMI moratorium being extended beyond August 31?

Juvina Maggie answered.
10 months ago

While we will have to wait for the final confirmation from the Ministry of Finance and the RBI, it does look like the 6-month moratorium would most likely end on August 31. The EMI moratorium was offered as a temporary deferral rather than as a waiver of loan EMIs.

Several reputed bankers like Deepak Parekh and Uday Kotak has asked the RBI Governor not to extend the moratorium as a longer moratorium period could impact credit behaviour of borrowers. It also had the potential to increase the risks of delinquencies post resumption.

However, this is likely to be accompanied by a more durable solution, which could be in the form of restructuring of debt. This will ensure to rebalance debt burden of genuine and cash flow positive borrowers, both businesses as well as individuals, relative to their cash flow generation abilities.

The resolution under this modified restructuring framework can be utilized till December 31. However, the banks have been encouraged by the RBI and the Ministry of Finance to strive for early invocation, particularly for personal loans due to the higher level of risk.

Considering that the RBI and the MOF have a ready plan to restructure eligible loans in the post pandemic scenario, it does look like the RBI may not be too keen to extend the EMI moratorium period beyond August 31.