This provides relief to companies whose loans might have been classified as bad loans.
The Delhi High Court has asked banks to maintain the status quo on asset classification for the March 1-May 31 period, the three months for which the RBI has given a repayment moratorium to borrowers, a report in The Economic Times has said.
The court issued the instruction while hearing a case between Yes Bank and real estate firm Anant Raj, which has taken a loan from the private lender.
The high court’s order provides some relief to companies whose loan repayments were due before March 1 but not classified as bad loans.
Moneycontrol could not independently verify the report.
Follow LIVE updates on the COVID-19 pandemic here
To alleviate the economic pain brought by the coronavirus, the Reserve Bank of India allowed banks to put on hold repayment of term loans between March 1 and May 31.
A loan is classified as “bad” if the payment is not made within 90 days after the due date.
“The restriction on change in classification as mentioned in the regulatory package shows that RBI has stipulated that the account which has been classified as SMA-2 cannot further be classified as a non-performing asset in case the instalment is not paid during the moratorium period,” the court said in its interim order.
Interest and penalty will continue to accrue, the Delhi HC clarified.
The court asked Anant Raj to clear an overdue payment to Yes Bank by April 25. This loan repayment was due on January 1.
The court added that Yes Bank cannot classify Anant Raj’s loan as an NPA since it had not been done already.
Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
First Published on Apr 9, 2020 01:43 pm