Business

Coronavirus impact: Defer EMI payments of small firms, individuals by 3 months, says FIDC

Updated : March 23, 2020 07:54 PM IST

Nation-wide lockdown is impacting businesses and consumers are facing a strain on cash flows.

Moratorium on EMIs wil ensure unintended defaults do not affect credit track record of customers.

The Finance Industry Development Council (FIDC) has requested the government that businesses and individuals who have suffered losses as a fallout of the Coronavirus outbreak, be allowed to defer payment of equated monthly instalments.

“The current situation is likely to result in delayed payment of EMIs even by customers with a hitherto excellent and unblemished repayment history. This may adversely affect their credit scores for no fault of theirs, seriously impairing their ability to raise finance in the future for business", FIDC said in a press release.

FIDC has asked for a moratorium on payment of EMIs for at least three months, by deferring at least three EMIs. This would ensure that unintended defaults do not affect credit track record and bureau scores of customers.

FIDC has also sought concessions for non-banking finance companies, which are the main source of funds for many of the affected sectors, like small road transport operators, taxi aggregators, infrastructure contractors, micro, small and mid-sized enterprises and traders.

“The lockdown has led to serious dampening of business activity resulting in lower utilisation levels of trucks and machinery with MSMEs and contractors, fewer tourist gatherings affecting incomes of taxi and bus operators, and work from home policies reducing staff transporters' cash flows,” the FIDC release said.

FIDC has sought a one-time restructuring of all regular accounts that are today not in default, but those that may become delinquent in the future, without the requirement of 5 percent provisioning in the NBFCs’ books.

Lastly, FIDC has asked for an extension of the period for recognition of NPAs from current 3 months to 6 months, but only in cases that are non-delinquent as on March 01, 2020.

To ensure that the concession is not misused, any provision made on loans that are already NPA should not be allowed to be written back to ensure maintenance of the sanctity of recognition of prior NPAs, FIDC said.

Coronavirus impact: Defer EMI payments of small firms, individuals by 3 months, says FIDC

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