COVID 19: Hope dims for full year moratorium for Kerala loans

KOCHI: The hope for a full-year moratorium sought for loans in Kerala including home, education, agricultural, personal, vehicle and SME, has been dashed after the Reserve Bank of India (RBI) on Friday announced a three-month moratorium for all types of term loans and working capital loans in the country.

The State Level Bankers Committee (SLBC) had already forwarded its recommendations for a one-year moratorium for the loans in Kerala to the Reserve Bank of India (RBI) after its meeting on March 17 with the State Chief minister, Pinarayi Vijayan.

The CM had even insisted on extending the moratorium to all loans irrespective of whether they are ‘standard’ or ‘bad’, an area where SLBC had some disputes with the government.

SLBC said CORVID 19 outbreak had literally shaken not only the economy of the state, but the morale of the state that has long been storied for its healthcare excellence.

But with the decision coming from RBI on Friday to allow a three-month moratorium for all term loans in the country, the chances for a longer moratorium for Kerala alone has  become extremely thin, according to general manager of a Kerala-based bank.

“RBI is unlikely to take different views on different states on a common demand like moratorium, after COVID 19 becoming a national tragedy affecting the whole country, though the magnitude could be diverse,” he added.

Talking to businessbenchmark.news, Canara Bank general manager and SLBC convenor, N Ajith Krishnan, said SLBC had already forwarded its recommendation to RBI requesting a one year moratorium for all loans in the state.

“It’s true that RBI has come out with a decision to allow three month moratorium for all term loans in the country. But still we are confident that Kerala’s case will be treated separately and favourably given the intensity of the harm COVID 19 had inflicted on this southernmost state of India,” Krishnan added.

The viral spread that has put the state on an unusual alert now has the highest number of COVID 19 cases at 164, above that of even Maharashtra, with the national tally crossing 725 as per the latest available data… which obviously keeps changing.

SLBC has been fully convinced about the need for a moratorium for all loans in the state that has been repeatedly devastated by one or the other catastrophe in each of the past three years with unfailing precision, with COVID 19 being the latest villain.

Allowing a three-month moratorium to loans in the country on Friday, RBI stated that in respect of all term loans, all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020.

SLBC had recommended similar relief measures such as moratorium on loan repayment and loan restructuring following the two floods of 2018 and 2010 too, but the RBI had then confined the relief measures to areas specifically notified as flood-hit.

 

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