Major regulatory policy change by RBI on Term loan and working capital loans

Major regulatory policy change by RBI on Assets to directly address the stress in financial conditions caused by COVID-19

 1. Moratorium on Term Loans : 
All commercial ban gayaks , co-operative banks, all-India Financial Institutions, and NBFCs  are being permitted to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020. 

 2. Deferment of Interest on Working Capital Facilities : 
For Cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.

 3. Redrawing of Drawing Power:

For cash credit/overdraft, Lending institutions may recalculate drawing power by reducing margins and/or by reassessing the working capital cycle for the borrowers.

( Above 3 items shall not treated as change in terms and conditions of loan agreements due to financial difficulty of the borrowers and, consequently, will not result in asset classification downgrade)