Here is what the May 22nd RBI announcement means. Given the extended lock down and its impact on the economy, the RBI announced on May 22 that all financial institutions can offer a further extension of deferment of payment for all outstanding term loans that were due between June 1 and 31st August. We at creditmonitor.info are here to solve all your doubts regarding this announcement and to help you decide whether to avail of it or not.
What does a loan moratorium mean?
A moratorium is like your EMI repayment schedule has been paused for a while. It is not a waiver or a discount, but an option to defer or delay the EMI repayment.
Which loans are covered under this moratorium?
All kinds of terms loans including home loans, auto loans, personal loans, retail loans, farm loans and crop loans.
When does the 3 month period start?
The loan moratorium applies to loan instalments that are due between 1st June 2020 till 31st August 2020.
Is my bank covered under this moratorium?
All banks and lending institutions like regional rural banks, small finance banks, local area banks, all co-operative banks or all-India financial institutions or NBFCs, can offer an extension of the 3 month moratorium, now from 1st June to 31st August 2020.
Will my credit history get affected?
No. Deferment of payment of EMIs in this 3 month period will not show as non-payment of loan and will not affect your credit history. This will not show as a loan default.
Does it mean I get a waiver or discount on my EMI/ loan?
No! The EMI payment gets paused for 3 months but your EMI tenure will get extended by 3 months. So if your automobile loan ends on 1st Jan 2021, by opting for this 3 month moratorium, you will still have 3 months pending on your loan but your EMIs will pause from 1st June to 31st August and resume on 1st September and end on 1st April instead.
Will there be any extra interest to be paid?
Yes. The loan duration or tenure will get shifted by 3 months and there will be some interest to be paid on the principal amount for 3 months. Click here to calculate the revised interest amount
Do I have to choose this? What if I have the money to pay my EMIs as per schedule?
If you have the money to pay your EMIs on time, please do so. But if you have a problem in paying the EMIs due to a cash flow crunch, you can opt for it.
How do I communicate my decision to my bank? Should I visit the bank personally?
The bank has to communicate with you asking for your consent to opt for the delayed EMI payment. If you decide not to accept this offer to delay the EMI charges, your explicit NO is required. If you decide to accept this offer to delay the EMI charges, your Yes is required. In case there is no reply from you, your no reply is deemed to be a Yes.
In case you have replied No to this Moratorium offer, your PDCs will be encashed as per schedule.
In case you have replied Yes to this Moratorium offer, your PDCs will not be encashed as per schedule.
Below are FAQ's link of some important banks.