IBA likely to hold meeting on Saturday over moratorium offered to NBFCs

Banking lobby Indian Banks' Association (IBA) is meeting tomorrow to discuss and take a call on extending the three-month repayment moratorium on loans offered to non-banking finance companies (NBFCs), according to sources.

NBFCs are offering the moratorium to their customers despite not getting it from their lender-banks.

They had made a representation to the Reserve Bank of India (RBI) earlier asking for some clarity on the applicability of the three-month moratorium to NBFCs and were hoping to get the same in the RBI's announcement today.

However, the RBI was silent on the demand made by NBFCs in today's announcement.

"Tomorrow there is an IBA meeting. There, banks are hopefully going to take a call on extending moratorium to NBFCs," a source told PTI.

 

On March 27, the apex bank had announced a three-month moratorium on payment of all instalments of term loans, due between March 1, 2020 and May 31, 2020.

When asked about the meeting, IBA chief executive Sunil Mehta said all important issues related to banks would be discussed in the meeting.

"It is a regular management committee meeting which will be held tomorrow. All general issues, including the moratorium to NBFCs, will be discussed," he said.

Even bankers were expecting to get some clarity on the issue in today's announcement by the RBI.

"We thought RBI will make a clarification on the issue but they were silent on that even today," said a banker with a state-owned bank.

According to a head of a NBFC, RBI's silence on the issue indicates that it wants banks to decide on the moratorium rather than give them a direction.

The RBI on Friday announced a slew of liquidity measures to provide liquidity support to the NBFC sector.

The central bank said it will conduct targeted long-term repo operations (TLTRO 2.0) for an aggregate amount ofRs 50,000 crore, to begin with, in tranches of appropriate sizes.

The funds availed under this will have to be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50 per cent of the total amount availed going to small and mid-sized NBFCs and MFIs.

It also announced to provide special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and NHB to enable them to meet sectoral credit needs.