In reference to its earlier circular dated March 27, 2020 and April 17, 2020, the Reserve Bank of India (hereinafter referred to as ‘RBI’) has announced further regulatory measures in the light of economic disruptions caused due to COVID 19 vide circular dated May 23, 2020. The RBI vide its circular dated March 27, 2020 had directed all existing Banks to grant a moratorium of 3 months on payment of all installments falling due between March 01, 2020 to May 31, 2020.
In view of continued risk of the deadly contagion, the RBI vide its circular dated May 23, 2020 has now further extended the moratorium period from June 01, 2020 to August 31, 2020.
Pursuant to the above, the following relief measures have been reinforced:
Rescheduling of payments for term loans –
All lending institutions have been permitted to further extend the moratorium period from June 01, 2020 to August 31, 2020, with accrual of interest for all such period of moratorium.
Rescheduling for working capital facilities –
For Cash Credit/ Overdraft facilities provided in respect of working capital a deferment of another three months, i.e. from June 01, 2020 to August 31, 2020 has been allowed.
Easing of working capital financing –
Lending institutions have been permitted to recalculate the drawing power by reducing margins till August 31, 2020. Drawing power is the withdrawal limit allowed for a company from the sanctioned working capital. In this regard, the lending institutions have also been permitted to review the allowed working capital till March 31, 2021.
The relaxations have been introduced with the aim to ease the repayment burdens and developing accessibility to working capital by way of mitigating servicing load. These relief measures would further prevent the transmission of financial stress to the real economy, and ensure the continuity of viable businesses and households.
 RBI/2019-20/244; DOR.No.BP.BC.71/21.04.048/2019-20