On Sunday, the National Disaster Management Authority (NDMA), the nodal division, introduced lockdown 4.zero until May 31 to test the unfold of the novel coronavirus.
The lockdown was first introduced by Prime Minister Narendra Modi on March 24 for 21 days in a bid to fight the COVID-19 pandemic. It was first prolonged until May Three and once more until May 17.
In March, RBI had allowed a three-month moratorium on fee of all time period 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 analysis report- Ecowrap mentioned.
The report mentioned the moratorium for three more months will suggest that firms needn’t pay until August 31, 2020, and which means that there may be virtually minimal risk of firms with the ability to service their curiosity liabilities then in September.
Failing to repay the curiosity liabilities will imply the account is likely to be categorised as non-performing loans as per the RBI norms.
“Thus, the RBI needs to give operational flexibility to banks for a comprehensive restructuring of the existing loans and also a reclassification of 90 day norm,” the report mentioned.
The RBI’s June 7 round is stringent and provides little flexibility to banks.
“The revised restructuring norms ought to give banks to restructure like say changing curiosity liabilities as much as March 2021 into time period loans, repayable in 3-5 years for working capital and on the finish of the tenor in case of time period loans,? the report mentioned.
RBI additionally must additionally make clear whether or not working capital expansions classify as COVID-19 debt, it mentioned.