EMI Moratorium: Banks a tad cautious in round two – status so far

By Ankur Mishra

Banks are adopting a more conservative approach while giving borrowers a repayments moratorium in the second round between June and August. At private lender ICICI Bank, retail customers have been asked to apply for a repayment holiday in each of the months between June and August.

Similarly, Bank of Baroda has changed its strategy from an ‘opt out’ to an ‘opt in’, excluding loans of below Rs 10 lakh. Rather than giving customers a blanket approval, as it has been doing, it has asked them to reach out to the bank if they are looking for a deferred loan payment options.

Reserve Bank of India (RBI) had earlier announced moratorium for three months from March 1, which was further extended till August 31.

BoB MD & CEO Sanjiv Chadha has said around 65% of its loan book is under moratorium, but he expects it to go down to 35% by August. Banks have been seeing a decline in the share of their loan books under moratorium from the 25-30% levels seen around May end, Macquarie Capital Securities (India) had written in a note to its clients.

“For HDFC, the retail loan book under moratorium has come down to 7% as of June 15 from 21% in May, and a small portion of this 7% is new customers opting for moratorium in the second round,” Macquarie said.

Bank of India, which has provided a moratorium to 41% of its customers, said borrowers are choosing to pay up. “Around 61% of customers have paid one or more instalments,” MD & CEO Atanu Kumar Das said.

Similarly, State Bank of India (SBI) chairman Rajnish Kumar had earlier said 82% customers have paid two or more instalments. SBI had also told the Supreme Court earlier that around 90% of its borrowers have not yet availed themselves of the moratorium. SBI made these observations during a hearing on the plea of interest waiver during moratorium period.

Macquarie also said almost 50% of customers opted for moratorium just to conserve cash. “In the second round of moratorium, banks could clearly communicate to customers about the additional liability they will incur,” it further said.