Customers accounting for 40% loans opted for moratorium, says RBI report
Customers accounting for 40% of outstanding bank loans availed the benefit of moratorium allowed by the Reserve Bank India (RBI) for borrowers affected by the COVID-19 pandemic, a report by the central bank says.
In order to mitigate the impact of COVID-19, the Reserve Bank of India (RBI) allowed lending institutions to grant a six-month moratorium on payment of instalments of term loans outstanding as on 1 March 1 2020. The scheme ended on 31 August 2020.
The MSME sector availed the scheme most with 77.5% MSMEs accounting for 69% of the sector’s loan outstanding opting for moratorium. Most sectors reported lower outstanding loans under moratorium in August 2020 compared to April 20201; however, Micro, Small and Medium Enterprises (MSMEs) registered a marginal increase and the number of MSMEs customers availing the scheme increased to 78% in August 2020, reflecting the stress in the sector.
The distribution of moratorium sought in MSME loans indicate that urban co-operative banks (UCBs) bore the brunt of incipient stress, followed by PSBs and NBFCs. In the case of moratorium availed for individual loans outstanding, the share of SFBs is the highest, followed by UCBs and NBFCs.
As many as 43% of individual customers accounting for 41% loans and 31% corporate accounting for 34% outstanding loans opted for the moratorium.
Nearly two-thirds of the total customers of Public Sector Banks (PSBs) and half of the total customers of private banks (PVBs) exercised the option to defer payments in April 2020.
As on August 31, 2020 this reversed, with PVBs accounting for a larger customer base under moratorium than other categories of lenders, mainly due to a four-fold increase in their MSME customers availing the benefit, and with sizeable customer base across categories (majorly individuals) opting out of moratorium in case of PSBs.
Small finance banks witnessed maximum customers (82% accounting for 68% of the outstanding loans) option for moratorium followed by urban co-operative banks, which saw 43% of customers accounting for 64% of the outstanding loan availing the scheme.
