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Startup fraternity hails loan deferment move by RBI; some wait for banks’ implementation

This move is dedicated to giving a breather to all EMI players, many of whom are currently income-starved.

, ET Online|
Last Updated: Mar 30, 2020, 04.57 PM IST
Loan deferment news brings relief to startups amid the Covid-19 crisis.
The Reserve Bank of India delivered a slew of measures it is taking to mitigate damages caused by Covid-19. Some of the most notable announcements include the repo rate cut by 75 basis points deferments of loan repayments and interest payment for three months.

The apex bank’s statement read, “All commercial, regional, rural, NBFCs, and small finance banks are being permitted to allow a 3-month moratorium on payment of installments in respect of all term loan EMIs outstanding on March 31.”

This move is dedicated to giving a breather to all EMI players, many of whom are currently income-starved. Lauding RBI’s moves, Indian Angel Network Chairman Saurabh Srivastava said, “It’s a good move for both the companies and the Banks as such loans would not show as NPAs for Banks.”

When asked if there should be a longer moratorium period, he said, “Perhaps they should have considered 6 months but I am sure they will take that call after a month based on what the situation is.”

Speaking on similar lines, Apoorva Rajan Sharma, Co-Founder and Managing Director, 9Unicorns said the moratorium on term loans was the biggest surprise package and is a welcome move.

“The move will also help banks as these will not be classified as NPAs. These are situations where the default rates are expected to be high but we need to remember that the defaults are not intentional. Hence, the deferment of loans repayment without any adverse asset classification is a welcome move,” he said, adding that the easing of interest rates on working capital facilities and easing of working capital norms will bring big relief to small and medium sized companies and individual borrowers.

Anup Jain, Managing Partner, Orios Venture Partners, appreciated the quick decision of the apex bank and lauded the announcements. "RBI has done well to assure there is liquidity. It would be good to announce higher insurance for consumers' deposits as they are worried after the PMC, Yes Bank debacle. Three months is good to start with. Perhaps, an assurance that they will extend it if the situation doesn't improve would have been great," he said.

Anuj Golecha, co-founder, Venture Catalysts, said infusing more liquidity into the economy was the ask from businesses from the very beginning. He too welcomed all the measures, especially the moratorium on term loans but believes that we need to wait for the banks’ implementation here.

“As RBI has allowed banks to allow a moratorium, it depends on what kind of steps the banks are willing to take in this regard. The move is, however, not going to impact the banks’ credit quality as these loans will not be classified as NPAs. At this point of time we just need to wait for the implementation adopted by each bank,” he said.

He added that on the moratorium, the regulator has not given any clarity if the credit card due falls under the term loans.

“Besides, the ease of interest rates on working capital will help small businesses to stay afloat during such economic crisis,” he said.

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