After the RBI’s decision to allow banks to offer three-month moratorium on repayment of term loans, Insurance Regulatory and Development Authority of India (Irdai) Wednesday allowed insurance companies to offer a similar moratorium to their term loan customers hit by COVID-19.
The decision is likely to benefit several corporates, especially finance companies which had taken term loans from insurers. Irdai has allowed moratorium for three months from March 1 to May 31. “In respect of term loans, insurers are permitted to grant a moratorium of three months towards payment of installments falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans and also the residual tenure, will be shifted across the board by three months subsequent to the moratorium period,” Irdai said in a circular to the CEOs of insurance companies.
It said interest will continue to accrue on the outstanding portion of the term loans during such moratorium period. “The asset classification of term loans which are granted relief should be determined on the basis of revised due dates and revised repayment schedule,” it said. It also said the rescheduling of payments, including interest, will not qualify as a default for the purpose of reporting of NPAs.
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