RBI’s Loan EMI Moratorium: All You Need to Know 

The Reserve Bank of India (RBI) announced several measures to boost the economy on March 27, 2020. Of these, the three-month EMI moratorium was the most relevant to common people.

While we all have heard the term moratorium during the recent Yes Bank crisis, how does it apply to loan EMIs? What benefits has RBI offered? We know that most people have a lot of questions about this announcement.

In this article, we will answer some obvious questions regarding RBI’s moratorium directive.

What is the RBI Moratorium directive?

According to the directive, all commercial banks, NBFCs, and financial institutions can extend a three-month moratorium on the repayment of instalments of term loans outstanding as on March 01, 2020.

So, I don’t have to pay the installments for 3 months?

Provided your bank offers the benefit, you can be excused from paying your loan installments for 3 months.

But, the RBI has passed a directive, right? Can my bank deny it?

The RBI has ALLOWED banks to offer the moratorium. This means that banks and financial institutions will now frame policies to implement the same. You can talk to your bank to understand if you are eligible for these benefits or not.

Is this applicable to nationalized banks only or all banks?

 The moratorium is applicable to all commercial banks – including local area banks, small finance banks, and regional rural banks, and non-banking financial companies and all-India financial institutions – including microfinance institutions and housing finance companies.

What exactly is an EMI Moratorium?

An EMI Moratorium means that your bank can allow you to defer your EMI payments for three months. Remember, this is NOT a WAIVER. It only allows you to defer the payment considering the lockdown and the pandemic. 

So, I will have to pay these EMIs later, right?

Yes. Once the moratorium period is over, you will be required to pay the EMIs. Further, you can talk to your bank to understand how they plan to recover these EMIs from you.

What types of loans are covered under this directive?

The directive covers all term loans like crop loans, agriculture term loans, consumer durable loans, personal loans, home loans, auto loans, education loans, or any other loan that has a fixed tenure.

What about my credit card dues? Are they covered too?

While credit cards don’t fall under the fixed tenure loan category, the RBI has clarified that they will be covered under this directive too. So, you can get a moratorium on your credit card payments for three months as well.

My EMI is due in some time. Will it get deducted?

As mentioned above, you need to talk to your bank to understand how they are implementing the directive. The EMI waiver is for the three months of March, April, and May. Please talk to your bank before the date of your EMI.

What will happen to my credit score if my EMIs are deferred?

The RBI has assured that the deferred EMIs will not impact the credit score of the borrower.

Will the bank charge me interest or penalty during this period?

There won’t be any penalty charged on the deferred installments. However, interest will continue to accrue on the outstanding part of the loan during the deferment period.

We hope these answers were able to quell your queries.