HDFC’S Parekh urges RBI not to extend moratorium
PAIN POINT Any deferment of loan repayment will hurt smaller non-bank lenders, he says
nMUMBAI: Housing Development Finance Corp. Ltd (HDFC) chairman Deepak Parekh on Monday requested Reserve Bank of India governor Shaktikanta Das not to extend the loan moratorium beyond August, saying doing so would hurt smaller non-bank lenders.
Some banks have been demanding that RBI allow them to decide on offering borrowers a one-time restructuring of loans on a case-to-case basis, according to three bankers, seeking anonymity.
RBI may allow banks to continue offering moratorium to stressed sectors such as aviation and hospitality, Mint reported on July 22. The regulator has been gathering data on loan repayments and borrowers’ cash flows since the lockdown began to understand their challenges.
“We see that even entities that have the ability to pay, whether it’s corporates or individuals, are taking advantage of this and deferring payment. We hear
EVEN ENTITIES WITH THE ABILITY TO PAY EMIS ARE DEFERRING PAYMENT, DEEPAK PAREKH SAID
there is some talk of extending the moratorium. It’s going to hurt smaller NBFCS,” Parekh told Das at a webinar organised by the Confederation of Indian Industry (CII). According to RBI’S latest Financial Stability Report, half of the total loan outstanding was under moratorium as on April 2020, of which small borrowers accounted for 65%, corporates 42% and individuals for 55.3% .
Parekh suggested RBI should look at buying corporate bonds like some central banks. He also said financial institutions should be allowed to restructure loans to avoid future problems. Governor Das did not comment on the moratorium but has ruled out RBI buying corporate bonds.