Demonetisation: RBI relaxes loan repayment norms for banks, NBFCs

Bringing some relief for banks and non-banking finance companies (NBFCs) from demonetisation, the Reserve Bank has relaxed certain asset classification and provisioning norms in certain cases. Consequent on withdrawal of Rs 500 and Rs 1,000 notes small borrowers may need some more time to repay their loan dues. Taking these representations into consideration,  RBI has decided to allow banks 60 more days for recognition of loans as standard in certain cases. The revised norm is applicable for loans payable between November 1 and December 31. Small borrowers who have been unable to pay back loans will be given additional two months to pay back dues to banks. This is for loans sanctioned by banks to NBFCs, HFCs and PACs. The extension is applicable to running working capital accounts with sanctioned limit of under Rs 1 crore and also, on term loans of under Rs 1 crore including agriculture and housing loans.The news is positive for the housing finance companies, believes R Vardarajan, MD of Repco, whose ticket size is usually around Rs 13 lakh. Ramesh Iyer of M&M Financials too agrees and said that two additional month will prevent standard accounts turning non-performing accounts. Watch video for more..