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Small borrowers get 60 days to repay loans

Tue 22 Nov 2016, 13:02:28
The Reserve Bank of India has decided to provide an additional 60 days to repay their loans. This facility is only available for borrowers with loans up to Rs 1 crore and to dues payable between November 1, 2016 and December 31, 2016. 
“Regulated entities (REs) shall note to ensure that this is a short-term deferment of classification as substandard due to delay in payment of dues arising during the period specified above and does not result in restructuring of the loans,” the RBI said.
Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation. This will also include housing loans and agriculture loans, it said. 
Dues payable before November 1 and after December 31, 2016, will be covered by the extant instruction for the respective regulated entity with regard to recognition of NPAs, the RBI said, adding that the additional time given shall 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 non- performing assets. 
The Reserve Bank has decided to take this move after it received representations that consequent upon withdrawal of the legal tender status of the existing Rs 500 and Rs 1,000 notes, small borrowers may need some more time to repay their loan dues. “Taking these representations into consideration, it has been decided to provide an additional 60 days beyond what is applicable for the concerned RE for recognition of a loan account as substandard,” the RBI said.

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