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RBI may not extend moratorium on repayment of loans beyond Aug 31: Report

-Business Standard

The six-month moratorium period comes to an end on August 31

The Reserve Bank is unlikely to extend the moratorium on repayment of bank loans beyond August 31 as an extension could impact the credit behaviour of borrowers without resolving the issues being faced by them following the outbreak of the Covid-19, sources said.

The RBI had announced a moratorium on repayment of debt for six months beginning March 1, 2020 to help businesses and individuals tide over the financial problems on account of disruption in normal business activities.

The six-month moratorium period comes to an end on August 31.

It was only a temporary reprieve to borrowers affected by the pandemic, the sources said, 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.

It is to be noted that several bankers, including HDFC Ltd Chairman Deepak Parekh and Kotak Mahindra Bank Managing Director Uday Kotak, had asked RBI Governor Shaktikanta Das not to extend the moratorium as many are taking undue advantage of the facility.

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