Banks ask RBI to extend deadline for repayment of interest on working cap loans

Banks have written to RBI seeking an extension of the 31 March, 2021 deadline for repayment of interest accrued on working capital loans during the moratorium. Around Rs. 15,000-20,000 crore of working capital interest in the banking system remains unpaid by the borrowers. Banks have sought extension on the deadline beyond March, 2021.

RBI had earlier allowed borrowers to repay the interest accrued during the six-month moratorium period to lenders by 31 March, 2021. After that the banks had converted the unpaid interest component during the moratorium period in Cash Credit (CC) or Overdraft Facility (OD) into a fresh term loan to help stressed borrowers.

The banks have already made a representation to RBI to extend the deadline for repayment of interest beyond 31 March, 2021.

“We have requested RBI to provide an extension in the deadline as many of the borrowers are still feeling the stress due to COVID-19”, according to a senior bank official. “Although, the companies have started servicing interest, but they are unable to repay the complete amount,” he further added.