Thiruvananthapuram: The State Level Bankers' Committee (SLBC) has decided to recommend one-year moratorium for all interest payments in the wake of the COVID-19 outbreak. The decision was taken following Kerala Chief Minister Pinarayi Vijayan's request. A final decision can, however, be made only after the Reserve Bank of India's (RBI) approval.
The EMI (equated monthly instalments) on loans will be restructured accordingly. The benefit of moratorium will be extended to only "standard accounts" that were prompt in their repayment till January 31, 2020.
"As for others, we are of the opinion that the default is on account of other reasons," Canara Bank general manager and SLBC convenor N Ajith Krishnan said after meeting the chief minister on Wednesday. "The date has been chosen because the intensity of the outbreak kicked in by the first week of February," Ajith Krishnan said.
Once the RBI gives its approval, these measures will be implemented by all the Scheduled Commercial Banks, Small Finance Banks, Regional Rural Banks and Cooperative Banks.
The SLBC has recommended moratorium for all kinds of loans including housing, education, vehicle and agriculture loans. It has also been decided to keep all attachment proceedings in abeyance for three months.
The SLBC came up with the measures after the chief minister sought major relief from banks on March 17.
Pinarayi had held a meeting with SLBC officials on March 17 during which he had put forward a slew of measures he expected the banks to take up. He had primarily asked for moratorium on loans for both institutions and individuals and also interest waiver.
The SLBC, however, has been silent about waiver. An SLBC source said waiver would not be approved by the RBI.
The chief minister had told the bankers that COVID-19 had badly dented a wide spectrum of economic sectors in Kerala, from trade to hospitality. He also pointed out that many had at least temporarily lost their jobs as economic activity came to a near halt in the state.
The SLBC had announced major relief measures, including moratorium on repayment and loan restructuring, after both the 2018 and 2019 floods. Then, the relief measures were limited to areas notified as flood-hit. This time, the relief will be universal.