Benefits Given by RBI in Second Loan Moratorium Due to Second Wave of Corona Pandemic

We all know that the India is facing Second wave of Corona virus. It has changed many lives and has a severe impact on our economy. With an aim to support Individuals, Small Businesses and MSME’s borrowers who are currently struggling under the monetary impact of second wave of Corona virus pandemic in India RBI has given certain benefits for Second Loan Moratorium.

Who are eligible for new Moratorium?

  • Restructuring not availed under Resolution Framework 1.0 –As per the RBI governor Individuals, Small Businesses and MSME’s having an aggregate exposure of Rs 25 Crore who have not availed any restructuring scheme earlier (under the Resolution Framework 1.0 dated August 6, 2020) and who have been declared as “Standard” as on 31st March 2021 shall be eligible under Resolution Framework 2.0.

  • Already availed restructuring under Resolution Framework 1.0 – Last year first loan moratorium was allowed for 3 months from 01st March 2020 to May 30, 2020 which was further extended by 3 Months to 31st August 2020. Those who availed benefit under first one can now get the moratorium period extended up to total 2 years.

What relief has been given by Central?

The following set of reliefs are being announced, specifically targeting Individuals, Small Businesses and MSME groups of borrowers:

  • Restructuring not availed under Resolution Framework 1.0 – Individuals and small businesses and MSMEs having aggregate exposure of upto ₹25 crore and classified as ‘Standard’ as on March 31, 2021 shall be eligible to be considered under Resolution Framework 2.0.

  • Already availed restructuring under Resolution Framework 1.0 – In respect of individual borrowers and small businesses who have availed restructuring and the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of moratorium and/or extending the residual tenor up to a total of 2 years. Other conditions shall remain the same.

  • Further, in case of small businesses and MSMEs, lending institutions are also permitted as a one-time measure, to review the working capital sanctioned limits, based on a reassessment of the working capital cycle, margins, etc.

When is the last date for applying new moratorium?

By 30th September 2021 RBI has given timeline to approach their lenders to request for restructuring of their loans. Once the application is made for new moratorium the lender will have to implement within 90 days if the concern party fulfills all the condition.