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Loan moratorium ends: Here’s how J&K Bank borrowers have to pay interest accumulated in last 6 months

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Srinagar: The loan moratorium announced by the Reserve Bank of India (RBI) in March came to an end on Monday and the repayment schedule resumes from today.

Last month, the RBI had allowed lenders to formulate a one-time loan restructuring plan for COVID-19-hit borrowers. While a committee has been constituted to come up with a restructuring scheme for corporate borrowers, the finer contours have been left to individual bank boards.


In this regard, J&K Bank, as per an official statement, has rolled out guidelines to allow a funded interest term loan (FITL) facility to its borrowers for “easy and stress-free” repayment of interest dues accumulated in their working capital accounts during the six month moratorium period ending August 31.

The scheme has been rolled out in the light of the permission granted by the Reserve Bank of India allowing the lending institutions, at their discretion, to convert the accumulated interest for the deferment period (March 01, 2020 up to August 31,2020) into a funded interest term loan (FITL) which shall be repayable not later than March 31, 2021.

“We appeal all our esteemed borrowers who might face difficulty in lump-sum payment of interest, to approach their respective branches for availing this facility. For the ease and convenience of our customers and to avoid any delays in the processing of such cases we have empowered the business units to sanction and disburse such cases at their level only,” Chairman and Managing Director J&K Bank, R K Chhibber said while commenting on rolling out of this facility.

He added: “A simple letter of confirmation from the interested borrowers is the only document required for availing this facility to keep it quite hassle free.”

The CMD further appealed the borrowers to approach their respective branches as early as possible, so as to avoid any further stress in their accounts.

The new scheme, rolled out to ease the burden on the borrowers, allows repayment of interest accumulated in working capital accounts during the moratorium period, in 6 EMIs starting from October 2020 till March 31, 2021. The interest rate shall be the same as applicable to the primary working capital limit (Fixed) of the borrower.

Earlier, in order to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses, J&K Bank had allowed a moratorium of 6 months on payment of all installments/ interest falling due between March 01, 2020 and August 31, 2020. This moratorium had been allowed in terms of RBI’s COVID19 regulatory package.

The moratorium of six months inter-alia included deferment of recovery of interest applied in respect of working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”). With the moratorium allowed in terms of regulatory package set to end on 31st August 2020, repayment of loans shall resume from September 2020 onwards. In case of term loans the repayment schedule/ residual tenor shall be shifted across the board by 6 months after the end of moratorium period.