The Indian Banks’ Association (IBA) on Monday held a meeting between its members on how best to implement the notification. The association is now planning to write to the regulator seeking clarity on how to execute the moratorium. The Reserve Bank of India (RBI) allowed banks to offer their borrowers a three-month moratorium on repayments. The meeting also took stock of banks’ preparedness in delivering services amid the lockdown, particularly to beneficiaries of the government’s recent announcements on income support.
State Bank of India (SBI) chairman had explained that bank profitability does not take a hit under a moratorium. “Interest accrual does not stop and the payable date gets changed,” he had said on a con call with reporters after the RBI announced its monetary policy.
Banks are planning to ask the RBI if they should forgo this additional interest in the case of borrowers who choose to avail the moratorium or continue to apply it and simply defer the date of repayment. The regulator’s response could be significant in terms of the actual payout that beneficiaries of the moratorium will have to make.