On the shade of COVID-19 pandemic and the nation-wide lockdown declared, the government announced a major relief of loan moratorium to the country’s citizens. However, the facility is only benefitting a few individuals because not all lenders have been providing the facility.
Each Non-Banking Financial Company (NBFC) has come up with different approaches to deal with the moratorium announcement. Some NBFCs have offered the facility twice in the said three-month period, while another set of NBFCs require the customers to apply for moratorium every month. A few others are only offering moratorium based on their own discretion. In contrast to this situation, banks have offered moratorium to all the customers who have requested for the same.
The root cause of this deviation in the approach for dealing with the moratorium is the language used in the notification. The RBI’s notification specifies that the moratorium can be given by lenders and does not make it a mandatory norm. The regulations mention that those who obtain a moratorium facility cannot be reported as delinquent.
In this case, not much can be done even if the borrowers don’t repay the loan. In another case, some lenders agree to defer the repayments only if they believe that a customer is genuinely unable to make payments.
Speaking of the notification’s language and clarity about the announcement, banks believe that the regulator has instructed to all lenders to agree for deferring repayments to whoever asks for it. In addition, the regulator has also asked each lender to give a report on the number of borrowers who have opted for the moratorium. Though the regulator has not made it mandatory, it doesn’t want lenders to use the commercial judgement aspect to decide on who should get moratorium facility and who should not.
Borrowers are advised to write to the regulator along with the details of the case if a lender denies the moratorium.
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