A moratorium period is a time during the loan term when the borrower is not required to make any repayment. Normally, the repayment begins after the loan is disbursed and the payments have to be made each month. However, the RBI has made a one-time exception in view of the financial distress arising out of the global pandemic Coronavirus and the economic havoc wreaked by the lockdown imposed to control its spread.
The decision, announced by RBI Governor Shaktikanta Das after a Monetary Policy Committee meeting, will bring relief to the middle class who had been demanding a relaxation on EMI payments as a new month approaches.
This is a part of the Central Bank’s measures to counter the Coronavirus lockdown, which had started off with the RBI governor announcing massive slash of 75 basis points in the key repo rate to 4.4 per cent, to revive economic growth. The RBI Governor said all the measures announced will result in total liquidity injection of Rs 3.74 lakh crore into the system.
Earlier in the week, Department of financial services secretary Debashish Panda had written to the RBI, suggesting the moratorium of a few months on the payment of equated monthly installments (EMIs), interest and loan repayments and a relaxation in the classification of non=performing assets (NPAs). Panda had also underscored the importance of maintaining liquidity in the system.