Borrowers get 90 days grace period to repay retail loans

Reserve Bank of India (RBI) has directed banks to provide retail borrowers an extra 30 days, in addition to the 60 days extension provided for repayment of housing, auto, farm and other such loans up to Rs1 crore, in view of  the cash crunch.

RBI said the additional 30 days, in addition to the 60 days provided earlier, will be applicable to running working capital accounts (OD / CC) /crop loans, with any bank, with the sanctioned limit of Rs1 crore or less.

The relaxation in repayment will also apply to term loans for business purposes, secured or otherwise, where the original sanctioned amount whereof is Rs1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This will also include agriculture loans.

RBI said the limits are applicable to the respective category of loans and will apply to dues payable between 1 November 2016 and 31 December 2016.

The RBI notification also permit all regulated entities (Res) to defer the downgrade of an account that was standard as of 1 November 2016, but would have become NPA for any reason during the period 1 November 2016 to 31 December 2016, by 90 days from the date of such downgrade in the case of the above loans.

The additional 30 days' time provided for repayment will only apply to defer the classification of an existing standard asset as substandard and not for delaying the migration of an account across sub-categories of NPA, RBI said.

Dues payable after 1 January 2017 will be covered by the extant instructions for the respective Res, it added.