The Reserve Bank of India (RBI) announced in the last week of March 2020 that lending institutions have to offer a three-month moratorium on equated monthly instalments (EMIs) for loans. These loans include all retail loans, credit card dues, EMIs on debit cards, SME loans and corporate loans.
It is a temporary relief measure for borrowers wherein they get a grace period of three months for EMI payments. They can skip paying EMIs from March - May for this year and resume payment from June 2020 onwards. Many banks have announced the related process and conditions.
Who all are eligible for taking up the EMI moratorium?
Bank customers who have availed of loans and/or have credit card dues or overdrafts prior to March 1, 2020 are eligible.
What is the process for taking up this facility?
Each bank has its own process. Contact your bank or financial institution to understand the exact process.
HDFC Bank – Call up on the number – 022-50042333 or 022-50042211 and follow instructions. You can submit the request on their website also. If you do not opt for it, it will be assumed that you will pay EMIs as expected. For credit cards, turn off the auto pay feature or do not pay the EMI to avail the benefit. Post May 31st, resume paying as expected.
ICICI Bank – Customers with loans such as commercial loan, two-wheeler loan, small business loan, Kisan credit card, premium overdraft, etc. will get relief for EMI payments automatically. hey have to explicitly inform the bank to opt out of it.
Customers with home loans, auto loans, overdrafts, personal loan, education loan etc. have to explicitly opt in for availing of the moratorium.
Check this link for detailed information.
Are there any charges for this offer?
Late payment charges will not be levied and no refund will be made for EMI already paid for March 2020 in case you take up the EMI relief offer.
If you miss out on EMI payments for three months, your loan tenor will increase to accommodate the interest accrued for the three months. The interest from June 2020 will be calculated on the principal amount that has been unpaid for March, April and May. So the EMI payment on the loan or overdue amount will become higher. If the loan tenor cannot be increased, the EMI will increase further to accommodate for the period when EMI was not paid. Here is an example -
If your regular income is intact and you have an emergency fund in place, continue your EMIs as-is. Do not avail of the EMI relief measure as you will only increase your cash outgo. But if you are struggling with finances, it might be better to take up the offer as it is better than missing out on payments and your credit score will not be affected.