EMI Moratorium: Banks a Tad Cautious In Round Two

moratoriumIn the second round between June and August, while giving repayments moratorium to the borrowers’ banks are having a more conservative approach. Also, 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 Rs 10 lakh by changing its strategy 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 deferred loan payment options rather than giving customers a blanket approval of the loan.

As announced by RBI the moratorium for 3 months from March 1 was further extended to August 31, 2020, as of now.

Sanjiv Chadha who is also a Bank of Baroda MD & CEO said the 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% is been provided by BoI to its customers, they also mentioned that customers who are borrowing are choosing to pay up. BoI MD & CEO Atanu Kumar Das also said “Around 61% of customers have paid one or more installments”.

Rajnish Kumar who is an SBI chairman had said earlier that two or more installments are being paid 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. There was a hearing on the plea of waiver of interest 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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