Monday, 23 January 2017

Restructured edu loans not to be classified as NPAs

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RBI has said that rescheduling of payment period of education loans due to unemployment of borrower will not be treated as restructured accounts for computing NPAs. Commenting on the issue, a RBI Official told the media, “Banks may allow up to three spells of moratorium (not exceeding 6 months each) during life cycle of education loan, taking into account spells of unemployment/underemployment, "without treating the exercise as restructuring." 

“However, banks would be required to maintain a higher provisioning of 5 per cent during the additional moratorium period and one year thereafter. The facility of extended repayment period and increased number of moratorium for repayment may be extended to existing borrowers whose accounts are classified as 'standard'.

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