Proposal for extending bank loans moratorium welcomed

Economic experts on Tuesday welcomed the Reserve Bank of India (RBI)'s proposal for extending the moratorium on bank loans by another three months to help people impacted by the Lockdown to contain Covid-19. According to sources, suggestions from various quarters, including Indian Banks' Association, have come for the further extension of moratorium and the RBI is considering those actively.

On Saturday, the Government extended the lockdown till May 17 with some relaxations for some identified zones.

Asked to comment on the RBI's proposal, Akhilesh Srivastava, Professor of Economics, said " Income stream will not resume due to the continuation of lockdown. Many entities and individuals will be unable to service their debt in this circumstances at the present moratorium period ending on May 31."

"So, extension of moratorium by another three months will be a practical approach from the regulator," Mr Srivastava observed.

When her view was sought in the matter, Neha Sinha, a senior public sector bank official, maintained " It will help both borrowers and banks in this difficult times."

Earlier, on March 27, the RBI had allowed banks and financial institutions to offer a moratorium of three months on payment of instalments of all term loans outstanding as on March 1 to help mitigate hardship faced by borrowers.

As a result of this moratorium, individuals' EMI repayments of loans taken were not deducted from their bank accounts.

Informatively, the experts had said on April 24 that India needs to grow at an average of 14 percent every year over five years to achieve the economic target of 5 trillion dollar by 2024-25.

This was observed by them on the completion of one month of the ongoing nationwide lockdown.