Which Banks Offer Moratorium?

The Reserve Bank of India, after its recent measures to make the Indian economy stronger in face of the pandemic, has allowed lenders to give a 3-month moratorium to customers. This shall be on capital repayments and term loans. Many banks are already reported to have changed their loan rules to adjust to this new development. 

In the case of public sector banks, customers are provided with a moratorium automatically unless they want to opt out. Public sector banks want customers to approach them first with requests to be granted moratorium, which shall be decided on a case-to-case basis.

Let us see in brief the developments in the top Indian banks.

State Bank of India

The SBI is offering a complete moratorium period on term loan repayments. The repayment date is now extended to March 1. India’s largest lender shall contact customers by email and phone. This is to inform them about the details of their moratorium and how it will affect them as customers. 

For instance, it may affect their interest cost and repayment schedule

If customers want, they can choose to opt out of. 

SBI bank’s board will meet shortly to discuss the final touches of the moratorium plan.

Bank of Baroda

Bank of Baroda announced on its official Twitter account that it shall be offering a moratorium for all term loan customers. This includes customers with micro loans, corporate loans, small and medium enterprises, retail loans, agriculture, auto, housing, personal and education loans.

Implementation plans are not finalized.

Punjab National Bank

PNB has published a useful Frequently Asked Questions section on its website. Through this, it has clarified that the moratorium is, what they are offering, and how it can affect customers.

Outstanding dues of customers shall continue to attract interest during the moratorium. It needs to be paid to the bank once this period is over, which shall be three months according to the RBI’’s guideline.

PNB is also giving customers the option of continuing the repayment of loans normally if they choose to.

Other public sector banks

Banks like Syndicate Bank, Canara Bank, Oriental Bank of Commerce, Union Bank of India, United Bank of India, Corporation Bank, and Andhra Bank are also giving their customers a 3-month moratorium blanket. They are also educating customers why taking the facility will imply and how it may affect them.

HDFC Bank

According to the HDFC Bank, all of its retail customers can benefit from the moratorium period. However, the bank says that it is a voluntary benefit, which customers need to contact the bank to avail it. To opt out of this benefit, customers do not need to take any action. EMI installments shall continue to be deducted from their accounts normally.

Borrowers can ask for a refund if they have already given an installment for the month of April.

If customers have more than one loan, they can seek a moratorium for them both, but their moratorium interest shall be charged separately.

ICICI Bank

As India’s second-largest private bank, ICICI has reached out to customers through emails to explain the benefits of a moratorium period and its effects.

Customers shall get a few days to respond if they want to opt for the facility. Their payments shall be adjusted accordingly. All interest accrued has to be paid back after the 3-month moratorium is over. Taking the facility can extend the loan tenor or increase the interest.

IndusInd Bank

The bank is offering moratorium to all its small business and retail loan customers. Under their scheme, borrowers shall be encouraged to repay on time and corporate borrowers will have to contact them to get the moratorium.

Kotak Mahindra Bank

Customers who want to get the Moratorium benefit will have to contact the bank on [email protected]. To do that, customers should not forget to include their loan account number. Such emails need to be sent within 7 days of the installment EMI falling due.

The repayment schedule shall be increased to 3 months as per RBI’s advice, while the loan term tenor shall be extended commensurately. EMIs shall be recalculated along with moratorium interest.

In case borrowers have already paid installments or interest for March 2020, they can get the moratorium for April and May.

Kotak’s credit card customers shall be sent instructions by the bank with their first statement that falls due on or after April 1, 2020.

IDBI Bank

The bank shall be offering the moratorium facility as well, as it says on its official website. It was released on FAQ to clarify the benefits and possible effects of taking this moratorium benefit. If customers do not want to opt for this, then need to email the bank along with their loan details.

IDFC Bank

IDFC Bank customers wishing to get the moratorium period benefit need to contact the bank. Eligibility shall be decided by the bank on a case-by-case basis. IDFC is also contacting rural customers to let them know about this new facility.

As of now, Axis Bank, HDFC and IndusInd Bank have not disclosed their implementation plans publicly.

Meanwhile, the moratorium period offered by RBI itself has come under question as of late. Moody's opines that the loan moratorium could cause a greater build-up of credit loss for banks. India and China have both extended such measures to deal with the liquidity crunch amid the COVID-19 crisis. Although this can provide temporary relief to borrowers, it will constrain banks from taking proactive recovery actions and could lead to an even greater build-up of credit loss once the moratoriums are lifted, reports Moody's.

Moody's, in a report on the Asia-Pacific region on Tuesday, said that while policy stimulus will shore up credit quality for larger companies in sectors including airline and oil and gas, Asia's banking sector profitability would decline from falling asset quality and lower net interest margins.