Can I extend my loan tenure based on RBI stimulus measures announced on 5th May 21

The gist of announcements done by the RBI Governor today (5th May 2021)

Term Liquidity Facility of ₹50,000 crores to Ease Access to Emergency Health Services

Under this Scheme, the banks can provide loans till 31st March 2022 to entities such as vaccine manufacturers, importers/suppliers of vaccines, priority medical devices, hospitals/dispensaries, pathology labs, manufacturers and suppliers of oxygen and ventilators, importers of vaccines, and COVID related drugs; logistics firms and also patients for treatment (How? Can the banks lend loan to meet the cost of hospitalization? We have to wait for the guidelines)

Takeaways –

  • Creating a Covid Loan Book
  • Classifying such loan under-Priority Lending Sector
  • Loan at repo rate to banks and banks can lend to the borrowers  at an attractive rate.

Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)

A special three-year long-term repo operation (SLTRO) of ₹10,000 crores at repo rate for the SFBs, to be deployed for fresh lending of up to ₹10 lakh per borrower. This facility will be available till October 31, 2021.

Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as Priority Sector Lending

SFBs are being permitted to reckon fresh lending to smaller MFIs (with asset size of up to ₹500 crores) for on-lending to individual borrowers as priority sector lending. This facility will be available up to March 31, 2022.

Can I get an extension of Loan tenure? Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses, and MSMEs. (Loan moratorium Scheme)

New Scheme for those who have not availed benefit in Covid Part I last year

  • Borrowers i.e. individuals and small businesses and MSMEs having aggregate exposure of up to ₹25 crores
  • who have not availed restructuring under any of the earlier restructuring frameworks.
  • who were classified as ‘Standard’ as, on March 31, 2021, shall be eligible to be considered under Resolution Framework 2.0.
  • Restructuring under the proposed framework may be invoked up to September 30, 2021
  • This means, if you are having a loan of less than Rs.25 Crores, not taken any extension benefit in the past, which is not defaulted as on 31st March 2021, you can ask for rescheduling the loan up to a further period of 2 years. There is no interest reduction or waiver benefits, but you will get more time to pay.

Those who availed the old Scheme in Covid Part I

  • Can restructure their moratorium period/extend the tenure up to 2 years (this means they get more time to repay the loan)

Overall, a welcome move by RBI. It is doing it’s bit to overcome the financial pains during the pandemic by small entrepreneurs

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 25+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional and Registered Valuer (F&SA).Prasad welcomes your comments and questions. Please email him at [email protected]

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Hari
Hari
1 month ago

Well narrated sir👌👌👌👌

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