37.91 per cent bank loans under moratorium till end of August

Mumbai, Ta. 29 December 2020, Tuesday

The number of borrowers taking advantage of the moratorium did not decrease significantly over time. The RBI had provided a six-month moratorium on EMIs from March 1 to August 31 to provide relief to borrowers who were under stress due to Corona. In the early days of the moratorium, 90% of the borrowers took advantage of the moratorium.

At the end of the moratorium on August 31, preliminary figures provided by the Reserve Bank show that 8.50 per cent of the total loans outstanding in the banking system remained under the moratorium. These figures were provided in pursuance of the RTI application.

Given the high percentage of moratorium, the number of loan restructuring is also not likely to be high. Out of the total outstanding loans to the public sector, 31.3 per cent were under moratorium as on August 31. For private banks, the figure was 7.5 per cent, according to RBI data.

The Reserve Bank had provided moratorium in two phases of three months starting March 1. The moratorium's 6.50 per cent mark is higher than expected and this could mean higher levels of loan restructuring, an analyst said.

Banks have been directed to accept loan restructuring applications by December 31. The real picture of the borrowers' ability to repay loans, which has been suspended by the provisions of the Insolvency and Bankruptcy Code (IBC), in addition to the moratorium and subsequent loan restructuring exercise, is likely to become clear by the end of 2021. .

The gross NPAs in the country's banking system, which stood at 7.50 per cent of total advances at the end of September 2020, are expected to rise to 10.50 per cent by the end of March 31, 2021.