EMI Moratorium: Banks a Tad Cautious In Round Two

moratoriumIn the second round between June and August, while providing repayments moratorium to the borrowers’ banks are having a more conservative approach. Also, the retail customers in ICICI Bank have been asked to apply in months between June and August, which is every month for a repayment holiday.

Bank of Baroda has excluded loans of below Rs10 lakh by changing its framework from an ‘opt-out’ to an ‘opt-in’. Bank of Baroda has asked its customers to reach out to the bank if they are looking for delayed loan payment options rather than giving customers a blanket approval of the loan.

Based on the declarations by RBI the moratorium for 3 months from March 1 was further expanded to August 31, 2020, for now.

Sanjiv Chadha who is the Bank of Baroda MD & CEO said “not repaying a loan is around 65 percent of its loan book, but he is also expecting that by the end of august not repaying a loan to go down to as low as 35%. Macquarie Capital Securities said, around May-end there is also a decline in the share of banks of their loan books from the 25-30% levels under a moratorium”.

Macquarie also said that “For HDFC, the retail loan book under moratorium has come down to 7% as of June 15 from 21% in May, and a small portion of this 7% is new customers opting for a moratorium in the second round”.

A moratorium to 41% has been provided by BOI to its customers, they also claimed that customers who are borrowing are choosing to pay up. BOI MD & CEO Atanu Kumar Das added “Around 61% of customers have paid one or more installments”.

Rajnish Kumar who is the SBI chairman had said earlier that two or more installments are repaid by 82% of its customers. State Bank of India had also told that earlier 90% of its borrowers have not yet availed themselves of not repaying a loan, to the Supreme Court of India. The hearing on the plea of waiver of interest was held during the moratorium period and SBI made these observations during that plea.

Macquarie also mentioned that just to conserve cash 50% of the borrowers have opted for a loan moratorium. It also said, “In the second round of moratorium, banks could communicate to customers about the additional liability they will incur”.

*Source: Financial Express

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