How will the RBI announcement on loan moratorium work for those with home loans, auto loans, personal loans, consumer durables loan? Here's what experts have to say.
Education loan defaults carry serious consequences. Credit bureaus record missed payments against both the student and the co-borrower, usually a parent.
The top court granted two weeks to the Centre and RBI to file the affidavit and place before it the decisions taken in this regard.
Yes Securities, the broking and investment arm of Yes Bank, on Wednesday said the Supreme Court directive on loan moratorium due to pandemic has brought the much needed clarity and there will not be any financial impact on the banks as the compound interest waiver is to be reimbursed by the government. On its verdict on a batch of pleas seeking moratorium extension beyond August 31, 2020, the apex court on Tuesday said it is a policy decision, refusing to interfere with the Centre's and RBI's decision to not extend the loan moratorium beyond the limit. However, it observed that the benefit of moratorium should go to all set of borrowers irrespective of the loan amount and asked to refund any amount collected as penal interest and compound interest during March-August 2020.
Students and families must stress test repayment capacity based on Indian salary standards.
'Common sense says if one can afford, servicing the loans during this period is a better bet than postponing it by three months,' says Tamal Bandyopadhyay.
The Supreme Court has refused to interfere with the government and RBI's loan moratorium policy, and declined to extend the six-month loan moratorium period.
Amid an increase in localised lockdowns across the country, Reserve Bank Governor Shaktikanta Das on Wednesday said there is no need for a loan repayments moratorium at present, stating that businesses are better prepared to face the situation. It can be noted that the RBI had announced a six-month moratorium in the early days of the national lockdown last year to help borrowers impacted by a chilling in economic activity. The entire state of Maharashtra is in a lockdown for non-essential services and localised and night lockdowns are being observed in many pockets of the country, including the national capital, to restrict the surge in cases.
If banks cannot charge interest from borrowers during the moratorium, who will bear that cost? Should the depositors subsidise the borrowers by foregoing interest on deposits? In that case, we will turn banking on its head! notes Tamal Bandyopadhyay.
'Banks have to be braver, willing to take more risks and give confidence to the customer,' observes Joydeep Ghosh.
Assam's flood death toll has risen to 80, with two new fatalities reported from Sivasagar district, as eight districts and over 2.12 lakh people remain affected. The state government has announced a six-month moratorium on loan repayments for flood-affected individuals and is seeking a special support package from the Centre.
Lenders can now initiate recovery proceedings since the SC has lifted the standstill on asset classification, which protected stressed accounts from slipping into NPAs.
The water rose from knee level to chest height within minutes before climbing even higher. Homes crumbled, cattle sheds collapsed and everything that could be carried away by the current vanished.
He said the SBI data showed that there is a rise in NPAs due to the coronavirus crisis but it is manageable as people have been cautious about increasing their liabilities especially in the retail, agriculture and MSME sectors.
Britain, which currently heads the group, is expected to make an announcement in the regard soon.
The Centre informed the Supreme Court on Monday that a decision is likely in 2-3 days over charging of interest by banks on instalments which were deferred during the moratorium period in view of the Covid-19 pandemic.
While lenders create a hype around the services offered on digital platforms, customers think otherwise, given that frustration due to the quality of service has only increased, over the years.
TransUnion Cibil CEO Bhavesh Jain highlights the improved retail portfolio quality in January but stresses the need for lenders to continuously engage with borrowers on credit usage and repayment, similar to the approach taken during the Covid-19 pandemic, as the impact of the Iran war on credit quality is still being assessed.
The Confederation of Indian Industry (CII) has proposed a 20-point policy agenda to the finance ministry, including a conflict-linked emergency credit line guarantee scheme and tax rationalisation on energy inputs, to support MSMEs, exporters, and energy-intensive industries affected by the ongoing West Asia war.
The National Company Law Tribunal (NCLT) has ordered the initiation of insolvency proceedings against Vishwajeet Jhawar, promoter of Marvel Group, following a petition by APRN Enterprises for outstanding debt.
Public sector banks may have to bear a burden of Rs 1,800-2,000 crore arising due to a recent Supreme Court judgement on the waiver of compound interest on all loan accounts which opted for moratorium during March-August 2020, sources said. The judgement covers loans above Rs 2 crore as loans below this got blanket interest on interest waiver in November last year. Compound interest support scheme for loan moratorium cost the government Rs 5,500 crore during 2020-21 and the scheme covered all borrowers including the prompt one who did not avail moratorium.
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.
The apex court had earlier asked the Centre and the RBI to review the move to charge interest on deferred EMIs during the moratorium period.
As a result of this moratorium, individuals' EMI payments of loans taken will not be deducted from their bank accounts, providing much needed liquidity to borrowers whose income has been disrupted due to the lockdown till May 31.
Don't opt for the moratorium unless critical, advises Charlie Lee, founder and CEO, True Balance.
Moratorium was only a temporary reprieve to borrowers affected by the pandemic, adding that a longer moratorium period exceeding six months can impact credit behaviour of borrowers and increase the risks of delinquencies post resumption of scheduled payments.
'With tuition fees for international students rising, education loans have become critical for bridging the gap between savings, scholarship, and full cost.'
The Gems and Jewellery Export Promotion Council (GJEPC) has urged the Centre to provide immediate relief measures as the tariffs imposed by the United States have started hitting the industry. US tariffs of 50 per cent on Indian goods came into effect on August 27.
'The US slump could hit our hosiery market hard since 40 per cent of our exports go there.' 'Job losses could be severe if the government doesn't step in fast.'
The Supreme Court on Wednesday said the Centre should implement "as soon as possible" the interest waiver on loans of up to Rs 2 crore under the RBI's moratorium scheme in view of the Covid-19 pandemic, saying the common man's Diwali is in the government's hands.
Prashant A Bhonsle lists 5 major points you need to keep in mind before applying for a student loan.
In such frauds customers get calls asking them to share their OTP in order to postpone their loan EMIs. Once the OTP is shared the amount is immediately siphoned away by fraudsters.
Experts say Indian Railways must grow its share in the freight market to remain financially sustainable.
Beware: During the period that you avail of the moratorium, there would be no repayment of interest or principal. Thus, the outstanding will go up substantially for this period as a consequence
In a festival gift to borrowers, the finance ministry on Wednesday approved guidelines for a scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months of loans up to Rs 2 crore.
Banerjee, who had been demanding a waiver of interest on the state's debts for a period of three years, said even a year's moratorium on repayment of interests on central loans would enable the state to create 10 lakh (1 million) jobs.
Apex exporters body FIEO on Tuesday expressed serious concerns over high US tariffs on Indian goods and said that textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness due to these steep duties. The US duties on Indian goods will increase to 50 per cent from August 27.
On August 7, the US president announced doubling tariffs on Indian goods to 50 percent for India's purchases of Russian crude oil, but gave a 21-day window to negotiate an agreement.
Tough times don't last, but tough people -- and smart financial strategies - do, says Ramalingam Kalirajan
