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All banks, NBFCs to allow 3 month moratorium on all term loans |
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| March, 27th 2020 |
This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts until the above mentioned time. The loan EMI payments will restart only once the time period expires.
The Reserve Bank of India (RBI) today in a press conference announced moratorium on term loans for up to three motnhs. The governor in its statement said, "moratorium on term loans. all commercial, regional rural, and nbfcs and small finance banks are being permitted to allow 3 month moratorium on payment of instalments in respect of all term loans outstanding on 31 march 2020."
This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts till the above mentioned time. The loan EMI payments will restart only once the time period expires.
The relief has been come after the finance ministry wrote to the central bank suggesting a moratorium on EMI, interest and loan repayments for few months, as per an Economic Times report.
This will come as relief as many individuals, especially self-employed individuals, were staring at income loss and would have found it difficult to service their loans such as car loans, home loans etc. If they had missed any EMI payment they were risking adverse action by banks which could result in a hit on their credit score.As per Reserve Bank of India (RBI) rules, any default payments have to be recognised within 30 days and these accounts are to be classified as special mention accounts.
What does moratorium mean for you?Moratorium period refers to the period of time during which you do not have to pay an EMI on the loan taken. This period is also known as EMI holiday. Usually, such breaks are offered to help individuals facing temporary financial difficulties to plan their finances better.
Normally, financial planners advise that one must check the terms and conditions of any EMI holiday period offered by the lender. This is because usually lenders charge simple interest instead of compounding interest during the moratorium period.
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