EMI Deferment Policy-3 months moratorium
RBI circular “RBI/2019-20/186 dated 27-Mar2020”
RBI circular “RBI/2019-20/220 dated 17-Apr-2020
The document comprises of the DIGIKREDIT POLICY in accordance with the captioned RBI circular for deferring the customer’s EMI to mitigate the burden of debt servicing brought about by disruption on account of COVID-19 pandemic.
1. EMI deferment:
Digikredit shall defer the EMI payment due for all/any of the months of March-2020, April-2020 and May-2020 & accrue interest for the months for which EMI is deferred. The accrued interest shall be added to the Loan amount, which shall lead to increase of the loan tenure by 3 months. The recovery of accrued amount shall be over the tenure of the loan, EMI being the same.
2. Customers to whom Digikredit shall allow the moratorium:
As per the circular, RBI has permitted to grant moratorium to all customers. However, to ensure that the viable Businesses do continue to make their EMI repayment, so moratorium would be given on customer application & approved by our internal risk team.
Moratorium to below customers:
- Customers who were unable to honour the EMI due for March 2020.
- Customers who apply for moratorium grant for cases less than 90 DPD, customer as on 29th Feb 2020 & shall be allowed at company’s discretion
3. NPA Recognition:
As per the RBI circular, the Asset Classification of the loans which are granted relief shall be determined on the basis of revised due-dates and the revised repayment schedule.
- The Moratorium won’t be applied to the delinquent customer (i.e. 90 DPD and above) as on 29th Feb 2020.
- The DPD count will continue for such accounts and NPA provision continue to apply on the delinquent accounts.
4. Reporting to the Credit Information Company:
As per the circular, the rescheduling of payments including interest will not qualify as a default for the purposes of supervisory reporting and reporting to the Credit Information Companies (CICs) by the lending Institutions.
- Hence, for the purpose of reporting the customer’s loan data, to the Credit Information Companies; the DPD calculation shall be done as per the point 3. of this document.
5. Instructions to the Staff involved in implementation:
As per the RBI circular, the lending institution shall ensure that the instructions specified in the circular is clearly communicated to the staff. In view of the same, Digikredit shall send out a mandate to all the customer facing staff as under:
- A request received from customer (on email, letter, recorded line, IVR) to any of the staff (i.e. customer service, credit team, sales team, collections team) from eligible customers (i.e. upto 90 DPD) shall be processed and changes in repayment schedule in LMS to be done.
- The Loan account number of the customer to whom the moratorium is granted shall be flagged in LMS and a revised repayment schedule shall be generated
6. Communication to the customer:
- Communication to be send to all the customers through all possible modes. (Email/SMS/Whats app / IVR).
- The customer would be required to consent for moratorium.
- Once the customer gives consent, the moratorium will be applicable for March (where ever not paid), April (Post NACH presentation) and May’20 EMI
7. Refund of EMI of March 2020 and April 2020:
- Refund will be provided to the customer for the NACH clearance on April 2020 installment, provided the customer have written/email communication to the company before 20-April-2020.
- Decision to refund the March 2020 EMI for customers who have requested in writing, shall be taken by CRO on cases to case basis.
In respect of accounts in default but standard (i.e 1 to 90 DPD) where moratorium is applied, and asset classification benefit is extended, Digikredit shall make general provision of 10% of the total outstanding phased over two quarters
- 5% – Quarter ended 31-Mar-2020
- 5% – Quarter ended 30-June-2020
This provision shall be adjusted against the actual provisioning requirements for slippage for the accounts reckoned for such provisions.
This provision shall not be reckoned for arriving at net NPAs till they are adjusted against the actual provisioning requirements. Further, till such adjustments, these provisions shall not be netted off from the gross advances but shown separately in the Balance sheet as appropriate.
For the cases which were in 61-90 dpd as on 29th Feb, 2020 and have moved to 91-120 bucket in Mar, but are given moratorium, provision will made at 25% as on Mar’20 and will continue the provision as per the existing provisioning policy.9. Disclosure in Financials:
Following disclosures shall be made in Notes to Accounts” for the financial statement for the half year ended 30-Sep-2020, as well as FY 2019-20 and 2020-21:
- Respective amount in SMA/overdue category, where the moratorium was extended
- Respective amount where asset classification benefit was extended
- Provisions made during the Q4 FY 2020 and Q1 FY 2021 (as per the Provisioning clause stated in point 8 of this document
- Provisions adjusted during the respective accounting periods against slippages and residual provisions