Mumbai: State-run Bank of Baroda on Wednesday said it is offering retail customers the option of getting a refund of the EMI that already has been deducted in March to meet any liquidity need during the disruption caused by COVID-19 pandemic.

This option is for home and auto loan borrowers only and is given under the three-month moratorium announced by the Reserve Bank of India last week, on payment of all instalments of all term loans falling due between March 1, 2020, and May 31, 2020.

The RBI has offered this dispensation to mitigate the burden of debt servicing brought about by disruptions on account of COVID 19 pandemic and to ensure the continuity of viable businesses.

The bank’s managing director and CEO Sanjiv Chadha said there are some cases where instalments have already been deducted because the RBI instructions came in over the last few days while the applicable period is from March 1, 2020.

“In those cases, we are giving our borrowers (home loan and auto loan borrowers) the option that they can make a request to us and we will be making sure that we refund that amount, reverse the transaction and the amount can be credited back to their account because we do recognise that these are special circumstances and the borrowers might want to preserve that liquidity,” Chadha told in an interaction.

“I would believe that this is what the spirit of RBI’s instruction is and we would want to make sure that when it comes to benefiting our customers we follow both the letter and the spirit of the instructions.”

He said the bank would refund the entire EMI amount- principal and interest, which has already been deducted, to its borrowers.

The lender will not raise any demand from its borrowers for repayment of loans during the moratorium.

For borrowers, where standing instructions to debit EMIs are there, the bank is reaching out to them, asking if they would like to suspend the standing instructions.

“We are sending SMSes to borrowers and they can give a reply and we will suspend that,” he said.

Explaining about the RBI moratorium, he said for business loans, the interest on outstanding loans would become payable at the end of the moratorium period.

“But in case of home and car loans, we are extending the maturity of loans. So, the period of loan would be the current maturity plus three months. So, to that extent the borrower does not have to bother about these three instalments,” he said.

The RBI moratorium is applicable on all term loans, including agricultural term loans, retail, crop loans and loans under pool purchases and cash credit/overdraft. This is available to all such accounts, which are standard assets as on March 1, 2020.

The overdue payments post-March 1, 2020, will not be reported to credit bureaus/ CRILC for three months and no penal interest or charges will be payable to the banks, Indian Banks’s Association (IBA) said in a frequently asked questions (FAQ) released on Tuesday.

Credit Rating Agencies (CRAs) may not consider the delay as default by listed companies if the same is owing to lockdown conditions arising due to COVID-19, it said.

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