New Delhi, December 29: The Reserve Bank (RBI) on Wednesday gave borrowers another 30 days over and above 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore. The above dispensation will apply to dues payable between 1 November, and December 31, 2016, it said.
"On a review, it has been decided to provide 30 days, in addition to the 60 days provided (on November 21)," the RBI said. In a circular to all lenders, the RBI said that it has decided to provide 30 days, in addition to the 60 days of relief provided in November post-demonetisation.The dispensation will apply to banks, non-banking finance companies, microfinance companies and housing finance institutions. Banks have hastened to clarify that this would mean credit card holders cannot delay payment as such a move would trigger all the charges.
The surprise announcement made by Prime Minister Narendra Modi on 8 November to scrap Rs 500 and 1,000 notes resulted in a cash crunch in the market leading to slowdown in business. As a result, the repayment capacity of the borrowers were impacted and there was fear of loan default rising.
The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 per week, limiting their options to repay their dues.
According to the RBI notification, running working capital accounts or crop loans with the sanctioned limit of Rs 1 crore or less would be eligible for this benefit. Besides, it said, "term loans for business purposes, secured or otherwise, the original sanctioned amount whereof Rs 1 is crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This shall include agriculture loans."
The apex bank further said that all regulated entities are permitted to defer the downgrade of an account that was standard as on 1 November, but would have become NPA for any reason between November and December by 90 days from the date of such downgrade.
The additional time of 90 days will only apply to defer the classification of an existing standard asset as sub-standard and not for delaying the migration of an account across sub-categories of NPA. Dues payable after 1 January, 2017 will be covered by the instructions for the respective entities.
Last month, the RBI had provided additional 60 days for repayment of loans worth up to Rs 1 crore. Separately, the central bank came out this special dispensation for farm loan earlier this week.