INSURANCE
IRDAI permits insurance companies to grant moratorium of 3 months on term loans
Apr-09-2020

In line with the Reserve Bank of India’s (RBI) directions, the Insurance Regulatory and Development Authority of India (IRDAI) has permitted insurance companies to grant a moratorium of three months on payment of term loans. Recently, the RBI had provided certain moratorium to the borrowers of term loans after the country was placed under the lockdown to fight coronavirus outbreak.

In respect of term loans, the regulator has said insurers are permitted to grant a moratorium of three months towards payment of instalments falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans and also the residual tenor, will be shifted across the board by three months subsequent to the moratorium period.

However, it added that interest will continue to accrue on the outstanding portion of the term loans during the moratorium period. Further, the asset classification of term loans will be determined on the basis of revised due dates and revised repayment schedule. The rescheduling of payments, including interest, will not qualify as a default for the purpose of reporting of NPAs.

Insurers have been asked to frame Board approved policies to extend the relief in form of moratorium to all eligible borrowers. The regulator also said concurrent auditors in their reports for the quarter ending June, 2020 should confirm that the insurers have complied with the Board Approved policy in granting moratorium. It has already provided additional time period for policy holders to pay their renewal premium as people may find difficulty in payment owing to the ongoing lockdown.

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