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RBI may extend moratorium on repayment of loans: Report

RBI may extend moratorium on repayment of loans: Report

With the government extending the nationwide lockdown up to May 31, the Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report.

On Sunday, the National Disaster Management Authority (NDMA), the nodal department, announced lockdown 4.0 till May 31 to check the spread of the novel coronavirus.

The lockdown was first announced by Prime Minister Narendra Modi on March 24 for 21 days in a bid to combat the COVID-19 pandemic. It was first extended till May 3 and again till May 17.

In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020.

"With the lockdown now extended up to May 31, we expect RBI to extend the moratorium by three months more," SBI's research report- Ecowrap said.

The report said the moratorium for three more months will imply that companies need not pay till August 31, 2020, and this means that there is almost minimal possibility of companies being able to service their interest liabilities then in September.

Failing to repay the interest liabilities will mean the account might be classified as non-performing loans as per the RBI norms.

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