Big relief to borrowers---RBI allows 3-month moratorium on loans:

The Reserve Bank of India, on March 27, made the big announcement that the Indian middle class and small entrepreneurs have been waiting for.

The RBI governor has said that all banking institutions can offer three-month moratorium on all loans for a period of three months. The RBI has also allowed banks to restructure the working capital cycle for companies without worrying that these will have to be classified as NPA.

This announcement is big since the economy is under hardship and reeling under job losses and industrial shutdown. The three-month moratorium will permit banks to avoid a large onset of NPAs during the 21-day lockdown and keep their books healthy.

For borrowers too, the three-month moratorium will be helpful to ease the burden on their savings and avoid the fear of turning defaulters. This is the big stimulus the small industry and working middle class have been waiting for.