Capital Small Finance Bank

Regulatory Package Under COVID-19

Policy & FAQ's

Covid-19 – Policy for Borrowers

Dated 30.03.2020

In order to reduce the burden of debt servicing and to ensure the continuity of the viable activities, the Honorable Governor of Reserve Bank Of India has announced several regulatory measures on March 27th, 2020. The relevant notification/ press release on the subject are as under:

  • I. Governor’s Statement - Seventh Bi-monthly Monetary Policy Statement, 2019-20, March 27, 2020
  • II. Press Release dated March 27,2020 on Seventh Bi-monthly Monetary Policy Statement, 2019-20 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India
  • III. RBI Circular no RBI/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20 March 27, 2020 on COVID-19 – Regulatory Package

In view of the above, the bank has decided to extend following relaxations to all the existing borrowers:

1) Rescheduling of Payments – Term Loans and Working Capital Facilities
a) Rescheduling of Payments – Term Loans
  1. Eligible Borrower: All the borrowers availing term loan facilities from the bank (including agricultural term loans, Retail loans) and having outstanding balance as on March 27, 2020.
  2. "Term Loan" means a loan which is repayable after a specified period. Therefore, any loan which has been granted for a specified period (as identified in the relevant loan agreement/ sanction letter) would be treated as a term loan for the purposes of this guidelines.
  3. All the Eligible Borrower of the Term loan will be provided:
    (i) a moratorium of 3 months for payment of all installments relating to term loans falling due in the period 1 March 2020 – 31 May 2020 (Specified Period);
    (ii) a corresponding extension in the residual tenor of the term loans; and
    (iii) the time for payment for each due is extended for 3 months during the Specified Period.
  4. The interest shall continue to accrue on the outstanding portion of the term loan during the moratorium period and will be recovered as part of the last three installments recoverable during the extended tenor of the term loan.
  5. Repayments, if any, by the borrowers during the Specified Period, shall be appropriated towards the amount due, if any, as on March 01, 2020 and the balance shall be considered as advance prepayment. Further, no prepayment charges shall be levied on such prepayments.
  6. Suspension of payment of “installments” would cover all installments, whether of principal (bullet or otherwise), interest or EMIs.
b) Rescheduling of Payments – Working Capital Facility
  1. Eligible Borrower: All the borrowers availing Working Capital Facilities (Cash Credit, Overdraft facilities, KCC) from the bank and having outstanding balance as on March 27, 2020.
  2. Interest on CC/ OD/KCC Facility:
    (i) interest on a CC/OD Facility shall continue to accrue;
    (ii) but not having to be paid by the Eligible Borrower for a period from 1 March till 31 May 2020 (deferment)
    (iii) the accumulated accrued interest shall be recoverable immediately after the completion of deferment.
  3. Repayment of CC/OD/KCC Facility, for a CC/ OD/ KCC Facility, if the borrower is contractually required to repay the outstanding amount under the CC/OD/KCC facility, any deferment or moratorium on such repayment obligation is not available.
2) Easing of Working Capital financing

In order to give fillip to the viable economic activities and to ease the MSME/Retail traders/ KCC holder, the bank may re-assess the drawing power of the borrowers taking into account revised working capital requirements or, by reducing the margins required to be maintained by borrowers or by reassessing the working capital cycle, subject to following:

  1. This relief shall be available in respect of all such changes effected up to May 31, 2020
  2. The sanctioning authority will also need to satisfy themselves that such a recalculation of drawing power or associated consideration is in fact necessitated on account of the economic fall out of the COVID-19 pandemic (as applicable to the relevant borrower) and such considerations being taken into account (by the lender) will be subject to regulatory scrutiny
  3. The said facility may be assessed only on the basis of the specific request of the borrower and Bank shall have the discretion to decide the type , extent and period of relaxation to be granted to a borrower.
  4. There is no obligation on the bank to provide additional funding in instances where the other terms of the credit facilities are not being complied with.

Moratorium FAQ's

Q1. What is the effective date of implementation of policy under Regulatory package COVID-19?
Capital Small Finance Bank has implemented the regulatory package under COVID-19 with effect from March 30, 2020.
Q2. Which customer is eligible to avail benefit of the scheme?
All the borrowers availing term loan and CC/OD/KCC limits having o/s balance as on 27.03.2020 are eligible to avail benefits of the scheme. However, the overdue amount (If any) as on March 1, 2020 is required to be deposited by the client at the earliest.

In case of CC/ OD/ KCC Facility, where the borrower is contractually required to repay the outstanding amount, any deferment or moratorium on such repayment obligation is not available.
Q3. What is a moratorium on loans?
Simply put, a moratorium is an extension, not a waiver. The bank has allowed three month extension on payment of EMI’s i.e. loan tenor has been extended for specified period i.e. March, April and May for all term loans. However, the overdue amount (If any) as on March 1, 2020 is required to be deposited by the client at the earliest.
Q4. How do I apply for a moratorium?
By default, the Bank is extending the benefit of moratorium to all the borrowers availing term loan facility as on March 27, 2020. However, if you do not wish to avail the benefit of this scheme, kindly contact your nearest branch.
Q5. My EMI is due soon. Will the payment not be deducted from my account?
The bank will not deduct/debit EMI from account of client falling due between 1st of March 2020 to 31st of May 2020. However the EMI’s already debited/paid by clients prior to 30th of March 2020 shall not be reversed/refunded.
Q6. If my loan disbursement is done after March 1, 2020, then would I be eligible for moratorium?
Yes, your loan is eligible for moratorium, if your installment/payment falls due on or before May 31, 2020.
Q7. Will the bank reschedule my tenor of term loan?
Yes, the repayment schedule for all such loans as also the residual tenor has been shifted across the board by three months after the moratorium period.
Q8. Will non-payment result in impact on my credit score?
The rescheduling of payments, including interest, will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs). Hence, there will be no adverse impact on the credit history of the borrowers.

However, any delay in payments of dues/ outstanding amounts payable after the expiry of the Moratorium for customers(s)/ borrower(s) who had availed of the Moratorium will qualify for the purposes of reporting to Credit Information Companies (CICs).
Q9. I have taken a Business Working capital term loan/ machinery loan/project loan for setting up a factory/unit/business enterprise. Whether I am Eligible to avail moratorium of EMI/Interest in all such cases?
Moratorium is available on all the cases and the payment of EMI (Including Principal and Interest) is deferred for three months.
Q10. How will interest be charged and recovered for cash credit/ overdraft facilities?
The accrued interest during the period March, April and May will be due and payable immediately after the end of the moratorium i.e. in June 2020.
Q11. Is this a waiver of EMIs or a deferment of EMIs? Does this mean that I will have to pay all 3 EMIs at one go in June 2020?
This is not a waiver, but a deferment. The three months’ installments will not be clubbed. You will have to pay the EMIs in three equal installments towards the end of tenor of loan.
Q12. Will you be charged a higher interest rate if you take this extension?
No, the interest will be charged at the same rate as applicable on loan/limit account.
Q13. Does the moratorium cover both principal and interest?
Moratorium has been offered for below payments due during the moratorium period:
(i) Principal and/or interest components;
(ii) Bullet repayments;
(iii) Equated Monthly Instalments or EMIs;
Q14. If the customer has already availed of a moratorium for any Term Loan, can the tenure get extended on account of the Covid Regulation?
If as per the existing terms of the loan, the repayment starts after May 2020, then the benefit of moratorium on account of Covid Regulation shall not be available since the moratorium is for customers whose repayment (interest or EMI) is active in the period Mar 01 to May 31, 2020.
Q15. Will the interest accrue during the moratorium period?
Yes, the moratorium is a ‘payment holiday’ however, the interest will definitely accrue. The accrual will not stop.
Q16. Will there be delayed payment charges for the missing instalments during the moratorium period?
No, there will be no overdue interest or delayed payment charges to be levied for not paying the installment during the moratorium period.
Q17. How will the moratorium be effective in case of working capital facilities?
The borrowers availing working capital facilities have been allowed a deferment of three months on payment of interest for a period from March 1, 2020 to May 31, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.

In case of CC/ OD/ KCC Facility, where the borrower is contractually required to repay the outstanding amount, any deferment or moratorium on such repayment obligation is not available.
Q18. Can the borrower pay EMI/Interest during the moratorium period?
Yes, the borrower can pay installments during the moratorium period.
Q19. Will such payment be considered as prepayment?
Yes, this will be considered as prepayment of EMI/ Interest but bank will not charge any prepayment penalty on the same.
Q20.Will bank obtain fresh PDCs and NACH debit mandates from the borrowers?
The Bank shall be entitled to obtain fresh NACH/SI mandates/ post-dated cheques with extended validity from the borrowers availing term loans, wherever required.
Q21. Is grant of moratorium a type of restructuring of loans?
The moratorium/deferment is being provided specifically to enable the borrowers to tide over the economic fallout from COVID-19. Hence, rescheduling of EMI’s will not be considered as restructuring of loans.
Q22. What will be the impact on the loan tenure and the EMI due to the moratorium?
Effectively, it would amount to extension of tenure. For example, if a term loan was granted for a period of 36 months on 1st Jan 2020 and date of closure is 1st January 2023, and with a moratorium of 3 months, the tenure effectively stands extended by 3 months – so new date of closure will be 1st April 2023.
Q.23.Are NBFC’s/MFI’s/HFC’s eligible under the “Easing of working capital financing”?
No, NBFCs/MFIs/HFC’s are not eligible under the “Easing of working capital financing”.