As per the latest updates, the Reserve Bank of India is unlikely in favor to give extension to the moratorium on repayment of loans. This loan moratorium was announced in March 2020 to help the people and businesses amid the outbreak of the Coronavirus pandemic. The moratorium is set to be over from 31st August 2020. Moksh Popli says this extension was a big relief for the individuals who were handling the loss of employment, reduced salaries, and sinking businesses. He says that with the unlock phases, things are changing and adversities are coming to a pause, still it is a long way to go.
Considering the benefits and reliefs of this loan moratorium extension people have come up with petitions and approaching the court to extend the scheme by the end of the year. Everything has its pros and cons, this extension was a real-time relief for few but at the same time, there are incidences where people are taking unnecessary advantages of this facility. In this segment, the HDFC Bank and Kotak Mahindra Bank are not in support to stretch the moratorium.
The authorities consider that these temporary measures are not enough to address the capital flow problems of the borrowers. The other alternative to reconstruct the loan scheme is in great demand. Unquestionably, we are familiar with the fact that this extension was just a temporary solution to help the mass in the context of the lockdown. According to Moksh Popli if the scheme will be extended, then there are chances that it will affect the credence of borrowers and it may increase the risk of defaults after the resumption of scheduled installments.
Recently, RBI declared a special resolution window for COVID-19 related stress within the existing Prudential Framework for Resolution of Stressed Assets. Through this resolution, the central bank wants to induce symmetry between guarding the interest of accounts and preserving financial establishment. This step will help in preserving the economic value of viable businesses by offering relaxation to businesses and people who are intensely swayed by the pandemic. This resolution can be entreated till 31st December 2020.
As per the reported sources, there are chances that reliefs can be customized by banks for every borrower to meet the specific problem depending on their need. This way people will not be able to take unfair benefits from the scheme. As per Moksh Popli, this is the time we need to be careful and support the Government by understanding the straightforward precepts of maintaining social distancing, wearing masks, etc. as they are striving hard to benefit the public by every possible means.