The Supreme Court will deliver its judgment tomorrow

Supreme Court to deliver judgment tomorrow in loan moratorium case, news agency says ANI.

In order to mitigate the impact of COVID-19, the RBI authorized credit institutions to grant a moratorium on the payment of term loan installments due between March 1, 2020 and May 31, 2020, which was subsequently extended. until August 31, 2020.

The central bank then allowed lenders for a one-time loan restructuring without classifying them as non-performing assets to help businesses and individuals deal with financial stress caused by the coronavirus pandemic. Only businesses and individuals whose loan accounts are past due for no more than 30 days as of March 1, 2020, are eligible for a one-time restructuring. For corporate borrowers, banks can invoke a resolution plan until December 31, 2020 and implement it until June 30, 2021.

For personal loans, banks have the option of invoking the resolution plan until December 31, 2020 and implementing it within 90 days from the date of invocation. Standard accounts, but not in default for more than 30 days as of March 1, 2020 will be eligible for restructuring.

According to a report through mint, the Reserve Bank of India (RBI) will likely reject the banks’ request to extend interest payment relief to working capital borrowers, as it seeks to end some of the pandemic-era policies in a backdrop for better prospects for the economy, three people familiar with the case said.

In a recent RBI Baking report, the profitability of non-bank financial corporations (NBFCs) may be “amortized” in the future due to loan depreciation and declining demand for credit.

Due to the moratorium on loans and the blocking of asset classification, the quality of assets has improved. However, many NBFCs have made additional provisioning in accordance with the expected credit loss (ECL) standard; and strengthened their capital by reinjecting dividends, RBI recently said in its India Banking Trends and Progress Report 2019-2020.

Overall, the percentage of clients benefiting from the moratorium was relatively lower for NBFCs, while outstanding loans under moratorium were higher than those granted by programmed commercial banks (SCBs) indicating an onset of stress, according to the report.

As of August 31, 2020, around 26.6% of total NBFC customers have been granted a moratorium and nearly 44.9% of their total outstanding loans were under moratorium, he said.

NBFCs’ consolidated balance sheet decelerated in 2019-2020 due to stagnant loan and advance growth plagued by a challenging macroeconomic environment and weak demand compounded by risk aversion, according to the report.

With contributions from agencies

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