Banks write to RBI and request an extension of the deadline for the repayment of interest on working cap loans
From Ankur Mishra
Banks have written to the Reserve Bank of India requesting that the March 31 deadline for repayment of working capital loan interest accrued during the moratorium be extended. With two weeks remaining for the period, around Rs 15,000-20,000 crore in working capital interest in the banking system remains unpaid by borrowers. The banks have requested an extension of the deadline beyond March 2021.
The Reserve Bank of India (RBI) had previously allowed borrowers to repay interest accrued during the six-month moratorium period to lenders by March 31, 2021) into a new fixed-term loan to help stressed borrowers.
FE has learned that banks have already issued a declaration to RBI to extend the deadline for interest repayment beyond March 31, 2021.
“We asked RBI to extend the deadline as many of the borrowers are still feeling the stress from Covid-19,” a senior bank official told FE. “Although companies have started to service the interest, they are unable to repay the full amount,” he added. Total accumulated interest during the moratorium period should be around Rs 15,000-20,000 crore, he said.
The largest lender in the country State Bank of India (SBI) is likely to have accumulated interest of around 5,000 billion rupees on working capital loans during the moratorium period, according to sources. Similar, Canara Bank announced during the December quarterly earnings that borrowers would pay $ 2.226 billion during the moratorium period.
Anil Gupta, vice president and head of financial sector ratings at Icra, said lenders could have requested regulatory relaxation of the longer repayment on this loan much sooner, as failure to pay these fees could lead to an increase in bad loans in the next quarter.
Lenders still need to mark each account as an NPA, as there was time until March 31, 2021 for borrowers to repay interest. The Supreme Court has also banned lenders from declaring new NPAs after August 31, 2020.