India, March 27 -- In an extraordinary decision, the Reserve Bank of India (RBI) announced that banks are permitted to allow a three-month moratorium on payment of installments of all term loans outstanding on March 1, 2020. The decision will be applicable to all regional, rural banks, co-operative banks, NBFCs including Housing Finance Companies; however the final decision on passing on the benefit to customers will rest with the banks. The RBI said the moratorium will not result in asset classification downgrade and will have no adverse impact on the credit history of the borrowers.

A moratorium period is a time during the loan term when the borrower is not required to make any repayment. Normally, the repayment begins after the loan i...