90-Day NPA Norm Shall Exclude Moratorium Period For Accounts Which Were Standard As On March 1 : RBI Governor [Read Statement]

The Reserve Bank of India Governor announced on Friday that the moratorium permitted by it on March 27 due to COVID-19 situation can be excluded from the 90-day period for Non Performing Assets(NPA) classification of accounts which were standard as on March 1.

"It has been decided that in respect of all accounts for which lending institutions decide to grant moratorium or deferment, and which were standard as on March 1, the 90-day NPA norm shall exclude the moratorium period. That is, there will be asset classification standstill for all such accounts from 1st March 2020 to 31st May 2020", the RBI Governor said.

On March 27, the RBI had permitted lending institutions to extend moratorium from March 1, 2020 till May 31,2020 with respect to amounts which fall due after March 1.

In the press address made on Friday, Mr Shaktikanta Das said that the RBI has taken note of the fact that the COVID-19 situation has prevented the borrowers from honoring their commitments which were due even before February 29 in standard accounts.

"Economic activity has come to a standstill during the period lockdown", RBI Governor noted.

The other key points from the announcement are :

 NBFCs can grant relaxed NPA classification to their borrower under prescribed accounts standards.

• Period of resolution plan for stressed assets extended by 90 days.
• Scheduled banks and cooperative shall not make dividend payout in respect of profits with respect to 2019-20 FY until further orders.
• Banks will be required to maintain additional provisioning of 10% on standstill accounts.
• LCR requirement of scheduled commercial banks brought down from 100 percent to 80 percent with immediate effect.
• Reverse Repo Rate reduced by 25 basis points from 4 percent to 3.75 percent. Policy repo rate remains unchanged.
• All Indian Financial Institutions such as NABARD, SIDBI and National Housing Bank will be provided Rs 50,000 crores to enable them to meet their demands.
• TLTRO 2.0 for Rs 50,000 Crores for boosting liquidity for MSMES and NBFCs. 

 These announcements were made to provide stimulus to the economy which has been affected severely by the COVID-19 pandemic and the lockdown.

Click here to download RBI Governor's statement

Read Statement of RBI Governor