Financial institutions are allowed to permit 3 month repayment holiday on interest with respect to working capital facilities that fall due between March 1,2020 and May 31,2020. The accumulated interest will have to be paid immediately after the repayment holiday/moratorium gets over. There might be businesses that have borrowed working capital loans in the form of cash credit or overdrafts and are facing financial difficulties due to the coronavirus pandemic. Thus, financial institutions may recalculate drawing power by reducing margins and/or reassessing the working capital cycle. The regulations might change from lender to lender.

Interest on your working capital loan will accrue on your payments, even though you opt for the repayment holiday. After the moratorium gets over, you would have to start making the payments. Hence, if you are financially adept to make these payments as per schedule, you can continue making the payments. Because paying once the moratorium period ends will cost you a lot.

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