RBI’s moratorium on EMI: Here’s all your queries answered

Amid the Coronavirus outbreak, entire country is under lockdown and the livelihood of millions of individuals both salaried and self-employed have been affected.

The Reserve Bank of India (RBI) on Friday permitted all lending institutions to allow a three-month moratorium on payment of installments of term loans outstanding on March 1, 2020. The announcement has given a big relief to the term loan borrowers.

In a policy statement, RBI Governor Shaktikanta Das said, “All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.”

It includes home loans, personal loans, education loans, auto and any loans that have a fixed tenure. They also include consumer durable loans, such as EMIs on mobiles, fridge, TV etc

Well, here are all your questions regarding the moratorium answered

EMI payment is due, Will it be deducted from my account?

RBI has permitted to banks to extend moratorium. Now the banks must decide whether it will cover all customers or only customers that request for relief.

Do I need to approach the bank?

No, you need not approach the bank or HFC to apply for a moratorium.

What if I am able to pay the EMIs as and when they become due over the next 3 months? Should I also opt for a moratorium?

If you can afford to repay your loan EMIs, it’s best to keep the EMI intact, so your overall interest payable goes down and your loan can be paid off faster

Is it a waiver of EMIs or a deferment of EMIs? If it is a deferment, then do I have to pay all 3 EMIs in June?

This is a deferment and not a waiver. RBI’s statement suggests the tenor may be shifted, which means, the loan may end 3 months later. But, there is still no much clarity on this issue.

Will it impact my credit score?

No, once relief has been granted from your bank, there will be no impact on the credit score.

Will it cover credit card payments and loans?

Yes, RBI’s operational guidelines made it clear that credit card dues are also covered and since credit card dues are covered, it is likely that loans taken on credit card may also be covered.

Does it cover both principal and interest?

Yes, you will be exempt from payment of your entire EMI, including payment and interest for three months.