Here are the frequently asked questions on 3-month moratorium on installment payments and their answers announced by RBI
The Reserve Bank of India has announced that all commercial banks, co-operative banks, all-India Financial Institutions, and NBFCs are permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. This may have led to a spate of questions from borrowers. Borrowers ask if personal loans are covered? Borrowers ask if this is an interest waiver? RupeeIQ has compiled a set of frequently asked questions and answers on this debated topic. Read on to know.
A moratorium period refers to a particular period of a loan tenure during which the borrower does not have to repay anything (principal or interest). In our case, it means borrowers will not pay loan EMI instalments for three months. Not paying for the moratorium period will not impact credit history and credit score.
This is not a waiver. You will be required to pay the EMIs as the moratorium ends, along with regular EMIs.
Do note customers may be required to pay additional interest of three months on their current outstanding loan amount. How or whether the customers will have to pay this extra interest is something that needs to be clarified by lenders.
This will be for term loans, which includes home loans, personal loans, education loans, auto and any loan that has a fixed tenure. If your lender agrees to accept, then yes: No EMIs for three months.
Do remember that the moratorium has to be likely requested by the borrower from the lender. Lenders won’t grant blanket moratorium for all is our understanding. You should speak to your lender about specifics.
You may still be required to request for cancellation of auto debit for three months. Wait for your lender to announce the details.
Our understanding is that the borrower will have to request the bank for moratorium and show that his or her income has been affected. Only a few banks may go for outright moratorium for all term loan instalments.
All commercial banks including regional rural banks, small finance banks and local area banks can offer. All co-operative banks can offer. All-India Financial Institutions, and NBFCs including housing finance companies and micro-finance institutions can offer.
Even though credit cards are not term loans, they are covered under this moratorium. As per RBI note, credit card payments is included.
We will advise you to pay all EMIs that you can afford. Just because a moratorium is available, it doesn’t mean you should take it. This is merely a deferment, not a waiver.
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