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.
What kind of loans does this apply to?
This moratorium applies to all kinds of loans, offered by all banks, lending institutions and NBFCs in India. It covers Auto loan, Retail loan, Personal Loan, Home loan, Agri loan and Two-wheeler loan and others. It covers both Principal and/ or Interest component on loans. It also covers EMIs, credit card dues and bullet repayments.
When does the moratorium period start?
The loan moratorium applies to loan instalments that are due between 1st March 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 the moratorium, if they wish. Please visit your bank’s website to know their policy regarding the moratorium.
Will my credit history get affected?
No. Deferment of payment of EMIs in this 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 but your EMI tenure will get extended.
Will there be any extra interest to be paid?
Yes. The loan duration or tenure will get extended and there will be some extra interest to be paid for the extension period. Click here to calculate the revised interest amount
Will I end up paying more for my loan, if I choose to OPT IN?
If you choose the moratorium, your EMI will be paused for the moratorium period and your payment tenure will be extended for an additional 3 months. For example, if your loan was to get over on 1st Jan 2021, by opting for the moratorium, your loan will get over on 1st April 2021. However, you will continue to pay interest for the extended period. So, as a consequence, you will end up paying more for your loan if you choose to OPT IN for the moratorium.
Is it a good idea to choose the moratorium for my existing loan?
You should be aware that choosing to OPT IN for the moratorium does not mean a discount or a waiver on your loan. Interest charges will continue to be levied for the moratorium period.
This means that by choosing to OPT IN for the moratorium, you will pay additional interest on your loan, thus paying more for your loan. 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. In case you decide to OPT IN for the moratorium, we advise that you OPT IN only for 1 month at a time, as a prudent financial measure. If you wish to opt in the next month as well, you can make a fresh application next month.
Should I keep my available funds for an emergency, just in case?
If your income has not been impacted by the lockdown and if you have the funds to pay your EMIs on time without choosing the moratorium, we advise you to pay as per your regular schedule. Please note that choosing the moratorium means that your loan tenure gets longer and interest gets accumulated for that period. This is why it is advisable not to choose the moratorium and to OPT OUT.
What if I have two loans with my bank, like a Personal Loan and an Auto Loan? Can I apply for a moratorium on both loans?
If you have two loans, you will need to submit a separate application conveying your decision to OPT IN or OPT OUT for each loan to your bank. Please note that the additional interest will be calculated for each loan account separately.
What happens if I had opted for the initial moratorium in March? WIll the moratorium automatically get extended for the period June to August 2020?
No, the moratorium does not automatically get extended. If you wish to avail of the moratorium for the 2nd time from June to August, you will have to apply once again to your bank.
How to convey my decision to my bank?
It is the bank’s responsibility to ask for your explicit consent to opt in for the moratorium.
OPT OUT: If you decide not to choose the moratorium, your explicit NO is required.
Once you decide to OPT OUT and you give a NO as your answer, your PDCs will be encashed as per schedule.
However, please note, if there is no reply from you, then your answer is considered to be a YES and your PDCs will not be encashed as per schedule.
OPT IN: If you decide to choose the moratorium option, your YES is required and your PDCs will be not encashed as per schedule.
Below are links to FAQ’s for certain banks. Please read in detail to know more.
To check your bank’s policy on the moratorium or to choose to OPT IN or OPT OUT, please visit your bank’s website or visit the nearest branch.