The impact of the pandemic outbreak caused a major concern for borrowers regarding their EMI payment. Hence, the RBI offered a relief package where the borrowers will be able to stand the benefit from the policy rate cuts, and a moratorium on all loans. The three-months moratorium deferred the payment of all loan instalments like home loan and personal loan starting from 1st March 2020. These measures were introduced to benefit individuals that had equated monthly instalments (EMI) due between March 1, 2020, and May 31, 2020. As the pandemic situation did not seem to get any better the RBI has now extended the loan moratorium for another 3 months until August 2020 to manage the liquidity crisis during the lockdown.
The number of borrowers availing the moratorium has gradually risen since March. The salaried class that might have held back initially, may now opt for a moratorium due to the lockdown. As a lot of people are experiencing pay cuts and job losses. Those in the worst affected sectors such as aviation industry, tourism, hospitality, transportation and media are facing major setbacks. The pandemic situation has caused banks to be in the loop with customers if they opt for a moratorium on loans. Some people are taking this option to ease the financial strain during the lockdown. However, the moratorium period is optional, you can opt for 1-2 months moratorium as well. Though, it should be kept in mind that this is just a grace period and not a waiver of the loan. You will be required to repay the loan amount at some point. Hence, you must make a decision wisely before you opt for the EMI Moratorium.
Banks are offering a variety of options from which the borrower can choose what suits them best. The following are the common options that are available to the borrowers
The borrower can pay the accrued interest all at once as soon as the moratorium ends.
Interest keeps adding in the loan amount, it will increase the monthly EMIs.
Your loan EMI may remain the same but the lender will increase the tenure of the loan.
The moratorium is not applicable on credit card bills. The reason being the rate of interest charged on the bill will be charged much higher as compared to loans. The moratorium is available on credit card balance but you may end up paying interest on the interest that has not been paid during the moratorium period. Hence, it is advisable to avoid getting a moratorium on credit card bills. Banks usually charge 3-4% on the balance amount that is not settled. So, not paying during moratorium will increase this to 6-8%.
The moratorium is available on a personal loan, housing loan, education loan, etc availed from Banks and NBFCs. You can apply for it if you fit in the eligibility criteria. So the general criteria for loan moratorium are as follows:-
Borrowers who have availed loans before March 1, 2020, can apply for a moratorium.
If your EMIs is due between March 01 - 31 May 2020 then you are eligible for a moratorium on loan.
Should have a good relationship with the lender for at least 6 months.
An individual with a good payment track record of EMIs is eligible
The following are the types of banks that are offering moratoriums during the pandemic crisis.
Public Sector Banks
Private Sector Banks
Getting a loan moratorium is completely optional. The moratorium period allows relaxation for EMI if you have considered applying for it the steps for the same are quite simple and easy. Every bank has a unique process to give access to the moratorium. They are as follows:-
Visit the official website of your Bank/NBFC.
Choose the option for “Loan Moratorium” and fill in the required details.
Once you apply, the bank representative will reach out to you for the further process.
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