Affected by note ban? 60-day bonus to repay your car loan

Acknowledging the cash crunch prevalent in the country due to the demonetization of Rs. 500 and Rs. 1,000 notes, the Reserve Bank of India (RBI) has allowed a 60-day bonus window for borrowers to repay their loans. All loans that are payable between November 1 and December 31, 2016, will be given the said bonus time window, before terming them as sub-standard, under Non-Performing Assets (NPAs). This relaxation is applicable for both - individuals and companies, who have borrowed loans up to Rs. 1 crore.

Under normal circumstances, loans that are not paid for in 90 days are treated as Non-Performing Assets (NPAs). The first category of loans under NPA is referred to as sub-standard asset. After the recent RBI order, an additional 60-day window has been provided to borrowers for repayment of their loans, over and above the 90-day period, before terming an NPA as sub-standard.

As a result, EMIs not paid between November 1 - December 31 won't be added to the 90-day period for terming a loan as a non-performing asset. However, all dues payable before November 1 and after December 31 will be covered under standard rules.

The Government of India has demonetized Rs. 500 and Rs. 1,000 notes from November 8, 2016. Since this decision, there has been a cash crunch in the market that is reported to have taken a toll on small businesses. The RBI has been receiving pleas asking for additional time to repay loans. The aforementioned step has been taken to provide relief for people whose businesses have been disrupted due to the note ban.

Source: Business Standard