The Reserve Bank of India will not extend the moratorium on loan repayments after it ends on August 31, people aware of the matter said.
While an extension was under active consideration, RBI decided against it as it was concerned about changes in credit behaviour it could induce among borrowers and increase the risk of loan defaults, the people cited above said on condition of anonymity.
Initiating a one-time restructuring of stressed accounts provided a more durable solution to tackling bad loans in the long run, the people familiar with RBI’s thinking said.
On Thursday, RBI governor Shatikanta Das said that the moratorium on loans was a temporary solution in the context of the lockdown, while a resolution framework will provide durable relief to borrowers facing Covid-related stress.
