A garland made of Indian currency notes is pictured in a shop at a market in Jammu. Photograph: (Reuters)
Banks and other financiers will get the extension for car, housing, farm and other loans of up to Rs 10 million (USD 146,800)
The Reserve Bank of India on Monday relaxed rules for classifying bad loans for small borrowers saying they may need more time to repay their loan dues after the government withdrew higher-value banknotes of Rs 500 and Rs 1000.
Banks and other financiers will get an additional 60 days for recognising certain loans of up to 10 million rupees ($146,800) as substandard, the RBI said in a notification.
The above relaxation is available to entities running working capital accounts with any bank with the sanctioned limit of Rs 1 crore or less, PTI reported.
Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation.
This will also include housing loans and agriculture loans, it said.
The relaxation will apply to dues payable between November 1 and December 31, said a Reuters report.
The demonetisation of higher value currency notes has affected normal banking activities including clearing of cheques. Besides, borrowers are unable to get payments from their creditors due to various restrictions including cash withdrawal limit of Rs 24,000 (USD 352) per week, limiting their options to repay their dues.
(WION with inputs from agencies)