These moves were welcomed by Prime Minister Narendra Modi who tweeted: "Today RBI has taken giant steps to safeguard our economy from the impact of the Coronavirus. The announcements will improve liquidity, reduce cost of funds, help middle class and businesses.
The decision to allow moratorium of three months on loan repayment will be applicable to all commercial banks, including regional rural banks, small finance banks and local area banks, co-operative banks, all-India financial institutions, and NBFCs, including housing finance companies and micro-finance institutions.
Financial institutions can shift the the repayment schedule and all subsequent due dates, also the tenor for such loans, by three months.
The financial institution however has to take a board approval for putting in a policy of moratorium of three months on loan repayment.
The rescheduling of loan repayments will not qualify as a default for the purposes of reporting to credit information companies (CICs) by the lending institutions. For borrowers the rescheduling of loan repayments will not adversely impact their credit history.
For lending institutions, the moratorium not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.