Should you opt for RBI’s EMI moratorium & defer loans by 3 months

A FAQ of the EMI moratorium announced by RBI on 27th March 2020. Should you opt for this?

Should you opt for RBIs EMI moratorium and defer loans by 3 months

Published: March 27, 2020 at 4:56 pm

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RBI has announced a three-month EMI moratorium in view of the nation-wide lock-down. Should you opt for this and defer your loan repayment by three months? A discussion.

What does the RBI moratorium mean? This is a three-month loan deferment. Meaning if your loan ends in 18 months and if you choose to opt for the 3-month deferment, the loan would end in 21 months.

Will I have to pay extra as interest if I choose the moratorium? Yes. The interest will accumulate over the 3-month period and the EMI will resume after three months.  This interest will be recovered immediately after the end of the moratorium period.

What my credit card dues also be eligible? Yes. All EMIs including credit card dues can be deferred.

How should I apply for the moratorium? You will have to apply to the bank. Please expect some delay from the bank’s end to process such applications.

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Will EMI deferment affect my credit score? No.

Should I opt for this? If you have the ability to pay the EMIs then you certainly should not. Do you think your cash flow problem will be over in three months and things will be back to normal once again? If yes, go ahead. However, if you can service the EMIs with your existing investments and cash reserves without affecting your lifestyle, it may be simpler, easier to do so.

If you expect extended layoffs, difficulty in resuming your earnings then this three-month delay is only a temporary measure for you to find some other way to take care of your EMIs. If this is the case, then it would be better to sell off some assets and take care of the loan.

It is important to recognise that this EMI holiday is not much of a respite given the present circumstances. Those with a regular income should never opt for it. Only those who expect a temporary disruption in cash flow should choose this. In the case of extended disruption, it may be better to arrange for alternate financing for either the EMI or pre-closure.

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17 Comments

  1. For credit card due if we ask them to delay will they charge interested on pending amount ???

    E.g. I have due date in 5-april let’s say of 50000/- if I ask bank to delay payment will they charge interest on it or I will only need to pay 50000/- in upcoming months ?

  2. Then what is the use of this moratorium, if bank charges interest on credit card dues. only use may be, it wont effect Credit score.

  3. How can u apply for moratorium its definitely not possible to rush to bank in these circumstances…what if ur not able to apply..

  4. Sir i have some more questions.
    What would be interest rates for moratorium during this period for different types of loans.
    How to approach banks for this moratorium. (customer cares r closed).
    Also RBI mentioned its banks choice to give this moratorium. Will they approve for all customers.?

  5. This is not called help from banks ,its a normal procedure of banking, if u delay payment on time they charge interest. No one is helping us. All bullshit

  6. Your 50000 will become 80000 in a couple of month’s time. This is no relief for a common man. Govt playing with words. Can’t it ask banks not to charge interest rates for a period of 3 months or reduce the rate?

  7. It’s a trap don’t opt for short cuts. Otherwise you will be cut in shorts and shirts.

    Understand don’t underestimate the power of banks.

  8. Best thing is to follow your payment cycle as usual unless you really into deep financial crisis for all kind of loans.
    Especially if delay credit card payment the interest rates are very higher and it will be over burden.
    Bottom line is if you are not effected financially due to COVID-19 better to follow regular cycle else look for alternative solutions to deal with as this temporary moratorium definitely would not be best option.

  9. My LIC HFL EMI will autobebt system in SBI home Branch.But I am sofar from home branch due to job.How can I opt for moritouriam.

  10. Sir I am requesting I have taken loan in phone means cash bean and cash bus and nano cred in this they giving us promble they are putting daily interest please I requesting you please tell them to private banks also give time to pay a loan we r requesting you sir kindley please help us sir

  11. Respected sir,

    About this last bit of the article…

    “It may be better to arrange for alternate financing for either the EMI or pre-closure.”

    The alternate method also will have EMIs? Isn’t it?

Comments are closed.