‘No deferment of MFI payments, only extension of time’

New Delhi, Nov 21 (IANS) The Reserve Bank of India (RBI) has not deferred repayments by micro-finance institutions (MFIs) consequent to the demonetisation of high value currency notes but only extended these subject to payment of interest and nor is there any moratorium on repayments, a leading player in the space said late Monday.

“If an end client needs extra time to make arrangements for the new notes for repayment of the loan, then the lending institution may give that time instead of classifying the loan as delinquent and report this as such to the credit bureau. The client’s credit history then does not get affected,” a statement issued by Microfinance Institutions Network (MFIN) CEO Ratna Vishwanathan.

“Similarly for any loan given by a bank to an NBFC MFI, if due to the demonetisation process, the repayments are delayed, then the borrower may be given more time but not exceeding a maximum of 60 days till 31st December 2016 and the borrower will not be classified as delinquent. It may be clarified that normal interest as per the original loan agreement, will apply to all delayed payments and hence this should be used only in genuine cases of difficulty,” the statement said.

“It is further reiterated that the RBI has not allowed NBFC MFIs to collect old notes of INR 500 and 1,000. It has also not announced a moratorium on repayments. Customers are expected to pay as soon as possible with the existing & new notes which are legal tender to avoid/minimise any additional interest levies on unnecessarily delayed payments,” the statement added.

The statement thanked the RBI for its circular on the issue on Monday, adding: “The circular needs to be understood in the light in which it has been issued. There seems to be a common perception that this allows deferment of loan repayment”, and that this was not the case.