Burdened by EMIs? Know this !

EMI means Easy Monthly Installments. The moratorium means a temporary stopping of activity, especially by official agreement.

RBI announced that Moratorium period is for six months altogether. RBI (Reserve Bank of India) eases loan repayment rules due to this COVID-19 pandemic, the total world suffered a lot of financial crisis so EMI of various loans is postponed for the first three months from April to June 2020.

The moratorium was for payment of all installments falling due between March 1, 2020, and May 31, 2020. However, it was also stated that “Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium.”

Then again RBI postponed for another three months from July to September 2020.

This can be extended to all loans without any approvals from the bank. It will also apply to credit card dues. The Supreme court refers to the consideration of waiver of interest on EMI till August 1st week to RBI.

The RBI allowed all lending institutions to offer a moratorium to borrowers on repayment of all term loans. This moratorium also covered credit card dues.

All Term Loans (including Agricultural Term Loans, Retail, Crop Loans and loans under Pool Purchases) and Cash Credit/Overdraft are eligible to avail the benefits under the package.

This is available to all such accounts, which are Standard Assets as of 1st March 2020. Further, to avoid unnecessary paperwork the facility has been extended across the board to all the borrowers by extending repayment of Term Loan installments (includes interest) by 90 days. The original repayment period for Term Loans will get extended by 90 days e.g. a loan repayable in 60 installments maturing on 1st March 2025 will mature on 1st June 2025.

To use this opportunity you have to apply online through your concerned bank website and inform about your postponement of payment of EMIs for three months at first. (April to June)Then for the next three months (July to September) in a proper form provided by your bank. Then you will receive a receipt to your registered E-mail id and Mobile number.

Further, if any bank agents or loan collection officers are approaching towards you in your dwelling place. You just show your receipt received from your bank. You may also report to your concerned bank in which you are holding an account. You should not get upset and inform the Bank Staff/Collection Agent that you want to avail the benefit being extended under the regulatory package.

Any delay in payment leads to default and gets reported to Credit Bureaus. RBI has constituted a Central Repository of Information on Large Credits (CRILC) to collect, store, and publish data on all borrowers’ credit exposures.

For business loans of Rs. 5 Crores and above, the Banks report the overdue position to RBI also through CRILC. As a result of this relief package, the overdue payments post 1st March 2020 will not be reported to Credit Bureaus/ CRILC for three months. No penal interest or charges will be payable to the Banks. Similarly, SEBI has allowed that Credit Rating Agencies (CRAs) may not consider the delay as default by listed companies if the same is owing to lockdown conditions arising due to Covid-19.

The relief is available for Credit Card payments also. In the case of Credit Card dues, there is a requirement to pay a minimum amount and if it is not paid the same gets reported to Credit Bureaus. In view of the RBI Circular, the overdue in the Credit Card account don’t get reported to the credit bureaus for a period of three months. However, interest will be charged by the Credit Card issuer on unpaid amounts. You should check from your Card provider to arrive at interest payable.

Although no penal interest will be charged during this period, you must remember that the interest rate on Credit card dues is normally much higher compared to normal bank credit and you should take a decision accordingly.

Any individual or businessman may take the benefits under this package if there is a disruption in your cash flows or there is a loss of income. However, you must take into account that the interest on the loans, though not mandatorily payable immediately and gets postponed by 3 months, continues to accrue on your account and results in a higher cost.

The procedure for refund of the installment/EMIs will be updated as a mandate by your concerned bank.

For further details and information please contact your concerned bank.

Mrs.Shiyamala Nisha

M.L., M.B.A., Ph.D.,

Advocate.