VisVoice

Waiving Interest on Interest during Moratorium A person has filed a case in Supreme Court that the interest on the interest accrued and applied during the moratorium period 01.03.2020 to 31.08.2020 should be waived by banks, both for term loans and cash credit/overdraft accounts. While banks have every right to apply interest on the interest portion that has already been applied till it is paid off, the burden of interest on interest can be reduced in several ways. On 4th April 2020, I sent my suggestion to RBI as under:  (Quote) " RBI decision advising banks  (i) to extend a moratorium of three months on the equated monthly instalments or the normal monthly instalments in respect of all term loans outstanding as on 1st March 2020 and (ii) to defer the interest due on working capital facilities outstanding as on 1st March 2020 will definitely help every borrower to breathe easy and help him/her/the organisation to make use of this money in meeting other pressin...

  Insolvency Suspension Ordinance     As per the first moratorium given, RBI permitted Lenders to grant a moratorium on payment of Loan repayment instalments falling due between March 1, 2020 and May 31, 2020. But the insolvency suspension ordinance says that one can initiate insolvency proceedings in respect of defaults that occurred prior to March 25, 2020.  So what will happen to instalments that fell due between 1st March & 25th March 2020 but not paid on due dates? Will it be considered default for insolvency proceedings initiation  or will be given the benefit of moratorium by RBI?  Clarity is needed from both RBI and IBBI Regards Viswanathan Retired Banker