Three-month moratorium on term loan – Benefits, Should you avail?


As you know, Reserve Bank of India (RBI) has permitted three month moratorium on repayment of all kinds of retail loan – home loan, auto loan, personal loan and education loan amid coronavirus crisis. RBI has also permitted deferment of repayment of credit card dues by 3 months. This move intends to ease the pressure of EMIs on the borrowers amidst the COVID-19 pandemic. The RBI Governor has further allowed the banks to deferment interest on working capital loans for the next three months. This means that the loan borrowers would not have to pay the EMI installments of the loan during this period i.e. moratorium period and will be applicable on all the term loans outstanding on March 1, 2020.

How it will benefits the borrowers

Now you don’t have to pay EMIs on any retail loan for three months. However, you must confirm with your bank before skipping EMI.

You can use the same amount for emergency amid corona crisis.

It will help people who suffered job losses or salary cut due to lockdown caused by coronavirus.

If you don’t repay your EMI, it will not be treated as default.

Also banks recovery agents or staff will ask you for repayment of loan for 3 months.

Bank will also not report it to CIBIL or any other credit information agency. So your creditworthiness b not be downgraded.

How to avail the 3 month moratorium period?

Bankers are still working on the modalities of how people can avail moratorium period. However, customer can inform his bank through phone or his relationship manager or through an email to cancel the ECS or PDC.

They can also transfer the fund to another account in which case they will incur the bounce charges which can be refunded back to your account.

Some banks may also issue an advisory asking whether you want to avail the moratorium period.

Should you avail the moratorium period?

However, it must be kept in mind that it is deferment not waiver of EMI. Interest will accrue during this period, so if you have the fund and are not facing any difficulty, it would be wise to pay the EMI.


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