Extension of moratorium may lead to credit indiscipline, say bankers

Extension of moratorium may lead to credit indiscipline, say bankers

The extension of moratorium by three months beyond May is likely to expose len

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The extension of moratorium by three months beyond May is likely to expose lenders to the risk of some borrowers having the capability to pay skipping repayments, fear bankers. The move is also expected to nudge lenders to extend this leeway to borrowers like some finance companies who were not beneficiaries earlier.


A senior State Bank of India executive said the moratorium is apt for small and medium enterprises whose cash flows have been impacted severely. But that is not the case with retail borrowers (mostly salaried). Few have lost jobs, but the number is less. This segment may pose a challenge to resuming normal payments. Consequently, banks may end up with higher delinquencies during hard days, the executive said.



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A top executive of public sector bank said some able borrowers might miss payments and request for more relaxations. The accumulated interest during the moratorium period would add to burden of repayments….



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