HDFC Bank chairman, Deepak Parekh on Monday appealed to RBI Governor Shaktikanta Das not to extend the moratorium period further in loan repayment. He said that it is being misused. If this happens further, the entire industry, including banks, non-banking financial companies (NBFCs), will suffer huge losses.
During a session by CII with RBI Governor Shaktikanta Das on Monday, Parekh said that please do not extend the moratorium period anymore. It is being misused. Some individuals and large companies are taking advantage of this scheme despite being able to repay the debt.
This is severely impacting the financial health of banks and NBPCs. He said that we have heard that it is being considered to increase the moratorium. You are requested not to do this. If that happens, it would be extremely damaging for the banking industry.
The RBI first announced a three-month moratorium on February 27, giving relief in debt payments. Under this, those who did not repay the loan installment from March 1 to May 31 were not to be put in the default list. After this, on 22 May, in view of the epidemic crisis, the government extended it for three months till 31 August.
RBI Governor, Shaktikanta Das did not give any major response to this suggestion of Parekh and just said, has taken note of Parekh. “We cannot say anything on the plan ahead. The idea is on. Parekh also suggested that central banks should buy bonds of private sector financial institutions in India as is happening around the world. Because you yourself have taken the stand that you will fund the banks and the banks will buy all the instruments which include microfinance or housing finance companies.”
Rakesh Bharti Mittal, vice-president of Bharti Enterprises and former president of CII, said the moratorium should be increased to reduce the stress on corporate and economy. He said, “I believe the number of companies joining the list of NPAs will increase further. In such a case, the decision to increase the Moratorium should be made with serious thought and deliberation.” The RBI itself stated in its half-yearly financial stability report that the moratorium will have an impact on banks. Due to the staggered financial activity in the Corona era, the total NPA of banks can increase from 8.5% in March this year to 12.5% in March next year.