Relief in Banking Services Due to COVID-19 Pandemic

Financial Services

  1. Relaxations for 3 months
    • Debit cardholders to withdraw cash for free from any
    other banks’ ATM for 3 months
    • Waiver of minimum balance fee
    • Reduced bank charges for digital trade transactions for all
    trade finance consumers

Corporate Affairs

  1. No additional fees shall be charged for late filing during a
    moratorium period from 01st April to 30th September 2020, in
    respect of any document, return, statement etc., required to be
    filed in the MCA-21 Registry, irrespective of its due date, which will
    not only reduce the compliance burden, including financial burden
    of companies/ LLPs at large, but also enable long-standing noncompliant
    companies/ LLPs to make a ‘fresh start’;
  2. The mandatory requirement of holding meetings of the Board of
    the companies within prescribed interval provided in the
    Companies Act (120 days), 2013, shall be extended by a period of
    60 days till next two quarters i.e., till 30th September;
  3. Applicability of Companies (Auditor’s Report) Order, 2020 shall be
    made applicable from the financial year 2020-2021 instead of from
    2019-2020 notified earlier. This will significantly ease the burden
    on companies & their auditors for the year 2019-20.
  4. As per Schedule 4 to the Companies Act, 2013, Independent
    Directors are required to hold at least one meeting without the
    attendance of Non-independent directors and members of
    management. For the year 2019-20, if the IDs of a company have
    not been able to hold even one meeting, the same shall not be
    viewed as a violation.
  5. Requirement to create a Deposit reserve of 20% of deposits
    maturing during the financial year 2020-21 before 30th April 2020
    shall be allowed to be complied with till 30th June 2020.
  6. Requirement to invest 15% of debentures maturing during a
    particular year in specified instruments before 30th April 2020,
    may be done so before 30th June 2020.
  7. Newly incorporated companies are required to file a declaration for
    Commencement of Business within 6 months of incorporation. An
    additional time of 6 more months shall be allowed.
  8. Non-compliance of minimum residency in India for a period of at
    least 182 days by at least one director of every company, under
    Section 149 of the Companies Act, shall not be treated as a
  9. Due to the emerging financial distress faced by most companies on
    account of the large-scale economic distress caused by COVID 19,
    it has been decided to raise the threshold of default under section
    4 of the IBC 2016 to Rs 1 crore (from the existing threshold of Rs 1
    lakh). This will by and large prevent triggering of insolvency
    proceedings against MSMEs. If the current situation continues
    beyond 30th of April 2020, we may consider suspending section 7,
    9 and 10 of the IBC 2016 for a period of 6 months so as to stop
    companies at large from being forced into insolvency proceedings
    in such force majeure causes of default.
  10. Detailed notifications/circulars in this regard shall be issued by the
    Ministry of Corporate Affairs separately.

Relief to borrowers Due to COVID-19 Pandemic

Moratorium on Term Loans

All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months.

Deferment of Interest on Working Capital Facilities

In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.
In respect of paragraphs 5 and 6 above, the moratorium/deferment is being provided specifically to enable the borrowers to tide over the economic fallout from COVID-19. Hence, the same will not be treated as change in terms and conditions of loan agreements due to financial difficulty of the borrowers and, consequently, will not result in asset classification downgrade. The lending institutions may accordingly put in place a Board approved policy in this regard.

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