RBI had initially allowed moratorium for the three months ended 31 May but later extended it till end of August Credit: Representational image

Guwahati: The Reserve Bank of India (RBI) has decided not to extended its moratorium period for repayment of loans beyond August 31.

This comes as there are fears that further extension will lead to default on loans, and changes in credit behaviour.

After the outbreak of COVID-19 pandemic and nationwide lockdown 1 which was imposed in March, RBI had introduced loan moratorium to give relief to borrowers and enable continuity of viable businesses. The central bank had initially allowed moratorium for the three months ended 31 May but later extended it till end-August.

Reports state that according to RBI data, nearly half of its customers accounting for around half of outstanding bank loans availed the benefit.

Later, to allow some respite to customer, RBI allowed debt recast for both corporate and retail borrowers, under which, lenders can extend the loan repayment period by a maximum of two years.

RBI governor Shaktikanta Das during his keynote address on Thursday said, “While the moratorium on loans was a temporary solution in the context of the lockdown; the resolution framework is expected to give durable relief to borrowers facing Covid related stress.”

Meanwhile, bankers have also expressed concern with any further extension in the repayments. They have also flagged the issue that even those borrowers who have the ability to repay are taking advantage of the relaxation, hence, the moratorium should not be extended.

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