Close on the heels of the RBI's relief by way of moratorium on all fixed term loans, now IRDAI, the insurance regulatory body, has allowed insurers to offer moratorium relief on repayment of all term loans provided by them. This is in view of the cash crunch many borrowers might be facing due to unsteady cash flow situation due to covid 19 led nationwide lockdown.
In its circular dated April 7 IRDAI said, "The Authority has received representations from industry associations seeking moratorium on repayment of term loans sanctioned by the Insurers, in the context of outbreak of Covid-19. RBI has issued directions dated 27th March, 2020, providing certain moratorium to the borrowers of Term Loans."
So, some of the guidelines issued in the direction by the RBI include:
1. IRDAI allows all insurers to grant a 3-month moratorium relief on repayment of term loans whose EMI falls due between March 1 and May 31, 2020. And for the same post the 3-month moratorium period, the repayment schedule as well as tenure shall be shifted by 3 months time.
2. Further, as per the release, interest will continue to be charged during the period on the outstanding term loan amount.
3. Also, basis the revised due date of EMI payment as well as due repayment scheme, asset classification shall be proceeded.
4. The payment as well as interest rescheduling will not amount to be a default for NPA reporting.
5. For extending the relief under moratorium, the insurance companies need to devise board approved policies.
6. Also, concurrent auditors in their report for the period ending June 2020 will need to point out that insurer has abided with the policy approved by the company board in extending moratorium relief to eligible borrowers.