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What is Moratorium?
One of the factors that are affecting the economic recovery of the Nation.
In March 2020, the Reserve Bank of India had announced a moratorium on the repayment of all term loans for both businesses and households, to ease their burden during the period of the lockdown.
Initially, it was allowed for 3 months but then extended till August.
“Data from the RBI’s latest financial stability report shows that at the end of April around half of the customers of scheduled commercial banks, accounting for half of the outstanding bank loans, opted to avail of the relief measures extended — underlining the precariousness of their financial position.” – Quoting what is written by The Indian Express.
As economic growth is slowing down, it is adversely affecting NPA (Non-Performing Assets). Anyway, it was on the downfall even before the COVID-19 situation hit. The sector is being hit bad and a few banks will be under the required capital requirements and thus will have to raise capital. (Back to start-up phase I guess).
However, the moratorium period might be extended by the RBI or a one-time restructuring of loans will be opted for the stressed sectors.
To conclude, the financial sector is suffering and this is slowing down the economic recovery.
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By Avishek BanerjeeOne of the factors that are affecting the economic recovery of the Nation.
In March 2020, the Reserve Bank of India had announced a moratorium on the repayment of all term loans for both businesses and households, to ease their burden during the period of the lockdown.
Initially, it was allowed for 3 months but then extended till August.
“Data from the RBI’s latest financial stability report shows that at the end of April around half of the customers of scheduled commercial banks, accounting for half of the outstanding bank loans, opted to avail of the relief measures extended — underlining the precariousness of their financial position.” – Quoting what is written by The Indian Express.
As economic growth is slowing down, it is adversely affecting NPA (Non-Performing Assets). Anyway, it was on the downfall even before the COVID-19 situation hit. The sector is being hit bad and a few banks will be under the required capital requirements and thus will have to raise capital. (Back to start-up phase I guess).
However, the moratorium period might be extended by the RBI or a one-time restructuring of loans will be opted for the stressed sectors.
To conclude, the financial sector is suffering and this is slowing down the economic recovery.