RBI circulars on loan repayment not applicable to bonds

RBI circulars on loan repayment not applicable to bonds

The Bombay high court (HC) has held that the circulars issued by the Reserve Bank of India (RBI) following the coronavirus disease (Covid-19) outbreak in the country regarding deferment in repayment of loan instalments during nationwide lockdown restrictions are not applicable to mutual funds and debentures.

A two-member HC bench, comprising Justices RD Dhanuka and VG Bisht, last Monday (July 13) said a perusal of the circulars indicated that it applied to all commercial banks, all primary (urban) co-operative banks, state co-operative banks, district central co-operative banks, all India financial institutions, all non-banking financial companies and also term loans and working capital facilities provided by those entities.

“The two circulars would not apply in case of mutual funds and debentures,” said the bench while dismissing a petition filed by Zee Learn Limited, an Essel Group company.

Zee Learn had moved the HC seeking a three-month moratorium on payment of non-convertible debentures (NCDs) due to the UTI Mutual Fund after the government allows schools to reopen that are currently holding online classes because of the raging viral outbreak.