RBI’s Moratorium to hurt Corporate Borrowers

For corporate customers whose working capital cycle has been impacted, the interest will get bunched up after 3 months. This will need to be repaid at the end of June. Reserve Bank of India’s move to allow banks to give a 3-month repayment moratorium to borrowers may stand to hurt corporate customers who have taken working capital loans.

Corporate customers who had availed of these loans will have to pay the 4-month interest by the end of June, failing which they will be classified as SMA 1 or Special Mention Account. SMA 1 are those accounts where repayments have been overdue for between 31 and 60 days. In the worst case if these borrowers are unable to pay immediately, then they can pay before 90 days end to avoid the tag of a non-performing account (NPA).

All the customers looking for settlement on their non-performing accounts can now repay by 30 June. SBI currently runs three schemes for NPA settlement including SBI One Time Settlement (OTS) 2019 (loan amount of Rs20 lakh -Rs50 crore), Rin Samadhan 2019-2020 (loans up to Rs20 lakh) and general compromise (loans above Rs50 crore).

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