The Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurance companies to grant a moratorium of 3 months in term loans. The move from the insurance regulator comes after RBI on March 27 had allowed banks and NBFCs to grant a similar kind of relaxation to their borrowers.
Insurance companies including LIC give loans against insurance policies and decision on the moratorium is likely to benefit several corporates, especially finance companies which had taken term loans from insurers. The moratorium from IRDAI will be applicable in installments if premium falling due between March 1 to May 1, 2020.
In its release, IRDAI said interest shall continue to accrue on the outstanding portion of the term loans during such moratorium period.
The asset classification of term loans will be determined on the basis of revised due dates and revised repayment schedule and the rescheduling of payments, including interest, will not qualify as a default for the purpose of reporting of NPAs, the regulator further said.
IRDAI has also asked insurance companies to form board policies to extend relief to the eligible borrowers. IRDAI has also asked auditors if these insurance companies to confirm in their reports that the respective insurance companies have complied with the board approved policies to grant the moratorium
First Published: IST