My suggestion is that the customer who can afford to pay the EMIs should stick to the original repayment schedules like the salaried class who are getting their salaries, said Rajkiran Rai G, MD & CEO, Union Bank of India.
Unions of several public sector banks had opposed the amalgamation of 10 PSU banks into 4 banks due to the lockdown triggered by Covid-19, but the merger has gone ahead despite the crisis. Andhra Bank and Corporation Bank branches will operate as Union Bank branches from today.
Giving update on the developments, Rajkiran Rai G, MD & CEO, Union Bank of India said, “All the preparations are there, merger will be very smooth process and as regards of branding and change of boards it is taking a bit of time because vendors could not move. In some of the branches we have done but then integration is almost ready and that is not much an issue.”
He further said, “At the branch level nobody is disturbed with the merger. At branch level we have kept things as it is, customers will find the same branch and the same branch staff and whatever scheme we have implemented is applicable to Andhra Bank and Corporation Bank. From the backend, for the EMI deferral we have given that permission that we will not demand any installment from any of the customer, he need not worry. Customers can walk into branch where they are dealing with and whatever work he has will be done by the existing staff. There is a very clear cut guidelines on that.”
Talking about impact of Covid-19 outbreak and the lockdown on the bank he said, “Every sector is impacted in one of other way, and whatever losses companies suffer ultimately portion of that gets passed on to the banks also by way of haircuts. At this point of time it is very difficult to quantify which sector is affected and to what extent," he said, adding that our first job is to see that our employees are safe, our customers are given the basic services as we are able to control when we get out top of these issues.
"I think at this point of time there is a lot of good thought process going on at the government level, RBI level and the bank level to look at the sectoral issues and give relief wherever required. Bringing back the business to normalcy as quickly as possible is very important, then only we will be able to access what kind of damages have happened,” he further added.
Giving clarity on moratorium he said, “It is not waiver of EMI, it is only postponement of EMI and the interest will be charged on this deferred EMI. The interest is permitted to be charged in these three months, and in the initial phase of EMI, the major component of EMI will be interest and the principal amount is quite small in the beginning. When the EMI is deferred to the end naturally the interest will accrue on the whole part of the EMI so it will not be exactly three EMIs, it may be slightly more than three EMIs at the end of the repayment period. This interest which is not collected gets capitalised.”
“My suggestion is that the customer who can afford to pay, should stick to the original repayment schedules like the salaried class who are getting their salaries. This is meant for people who are not generating sufficient cash supplies at this point of time like self-employed people, MSME borrowers etc. for them it is beneficial,” he added.