The current situation arising out of the COVID-19 outbreak and the following lockdown has created an acute disruption in the normal lives. The economy is also witnessing a slow fall-out owing to the said out-break. During this stressful period, the Reserve Bank of India (hereinafter referred to as 'RBI') has rolled out the provision of 'moratorium' in order to provide some relief to the borrowers. The RBI vide its notification dated March 27, 2020[1] has directed all the existing banks to grant a moratorium of three months on payment of all installments falling due between March 1, 2020 and May 31, 2020.

What is moratorium period?

A moratorium period can be understood as a temporary suspension of any financial activity until future events restore normalcy and permit cessation of the suspension. A moratorium may be imposed by government or by a business or in the said case, by the Central Bank of the nation i.e. RBI. Moratoriums are often imposed as a resolving response to impermanent financial hardships. In simpler terms 'moratorium' can also be considered as a 'repayment holiday' where the borrower is given an option to avoid repayment during the moratorium period. Hence the loan terms are restructured with express and agreed mutual consent between the lender and the borrower.

Scope and implementation of the moratorium

  1. The moratorium period is granted for a period of three month for payment of all installments falling due between March 1, 2020 and May 31, 2020.
  2. The moratorium period is granted for all term loans including principal/ interest components, EMIs and credit card dues.
  3. The circular is applicable for all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and Non-Banking Financial Companies (including housing finance companies).
  4. The moratorium benefit can be availed by the borrower if there is any disruption in cash flow or loss of income. It has to be understood that the moratorium period is only an allowed delay but it does not result in waiving off of the interest.

It is reiterated that the interest shall be accrued for all the three months for which the payment is delayed. In fact, the amount of interest payable after availing three months of moratorium will be increased due to the accrual added over the months.

Here is a quick illustration for more clarity on the above:

Amount Outstanding as on April 01, 2020


Assumed Interest rate

Moratorium Duration


Interest Accrued during the moratorium

Total Amount due as of June 01, 2020


Rs. 50,000


42% per annum

2 months

Rs. 3,571.16

Rs. 53,571.16


  Additionally, the businesses may further request the bank to re-assess their working capital requirements on account of disruption of their cash flows or elongation of working capital cycle. Working capital refers to the capital used by a business for its regular trading operations. It is a result obtained from deducting current liabilities from current assets. The decision is subject to bank's discretion and may be considered on case-to-case basis based on the genuineness of the request.

Comparative Chart of Banks alongwith their respective scope of relief (moratorium) 

Below is the list of banks along with their scope of moratorium preference

S. No.

Name of the Bank

Scope of relief/ moratorium


State Bank of India

Relief only if asked by borrower



Automatic relief


Canara Bank

Relief only if asked by borrower


IDFC first

Automatic relief for agriculture and rural loans. For rest, relief only if asked by borrower




Automatic relief for 2 wheeler loans, business loans, farm loans and jewel loans. For rest, relief only if asked by borrower



Central Bank of India

Automatic relief


UCO Bank

Automatic relief


Bank of Baroda

Conditional automatic relief


Federal Bank

Automatic relief for business loans up to INR 5 crores, agriculture, micro lending and gold. For rest, relief only if asked by borrower




Relief only if asked by borrower


Kotak Mahindra Bank

Relief only if asked by borrower


Bajaj Finserv

Relief only if asked by borrower


PNB Housing

Relief only if asked by borrower


Indiabulls Housing

Relief only if asked by borrower



Repco home finance

Automatic relief


Punjab and Sind Bank

Automatic relief



Relief only if asked by borrower


Deutsche Bank

Automatic relief


Standard Chartered Bank

Automatic relief


Axis Bank

Automatic relief for gold loans, farm, microfinance, commodity loans, tractor, commercial vehicles, construction equipment, nosiness loans and unsecured overdraft and term loans. For others on demand



Bank of India

Automatic relief

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.