Question

In: Economics

b) In your opinion, on what ground the banks can offer the loan moratorium by charging...

b) In your opinion, on what ground the banks can offer the loan moratorium by charging accrued interest or compounded interest on the loans?

Solutions

Expert Solution

B.

There can be different grounds for loan moratorium by the banks. The first ground is the general natural disaster and or pandemic / epidemic conditions in the economy that is severely negatively affecting the large population of the economy in term of people losing jobs, firms being closed and professionals not getting work. It is the scenario, when banks can or should offer loan moratorium for a limited period such as 3 months or 6 month duration. The second ground is the war between the nations, affecting economic conditions of the country, making people unable to pay loan EMIs. The third scenario, is the most of the banks seizing the deposits of their customers and no transactions or withdrawals takes place. It makes banks to consider those group of people who are affected and loan moratorium should granted to them.


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