EMI Moratorium of Retail Loans

On March 27, 2020, the Reserve Bank of India (RBI) announced a moratorium of three months on the payment of all installments for all fixed-term loans falling due between 1 st March 2020 and 31 st May 2020. The moratorium, which was ending on May 31, 2020, has been extended till August 31, 2020.

What Does the EMI Moratorium Mean?

In simple words, the EMI moratorium refers to a period during which you do not have to pay the EMI, or you get a break from paying your EMIs. However, the interest will be accrued during this break on the outstanding principal after your last EMI and this interest will be payable once the moratorium period is over. It depends on your lender whether it allows you to avail the moratorium period or not. In case it allows its borrowers to avail the same, it will charge the “accrued interest” either as a bullet payment in June or they might spread the accrued interest equally among the remaining EMIs.

Can I Avail the Moratorium for the Next Three Months?

No, the moratorium period is only for the EMIs falling between 1 st March 2020 and 31 st May 2020. If you have already paid your EMI due for March, you can avail the moratorium for the next 2 EMIs only.

Shall I Go for the Moratorium?

The 21-day lockdown because of Covid-19 made stakeholders and borrowers request for a moratorium due to uncertainty in their finances. If you have financial issues, you should request your lender to avail the moratorium – assuming your lender has given you an option to avail the same. However, if you don’t have a real need to defer your payment, availing the moratorium is not advisable as you end up paying higher interest. You can calculate the extra amount you need to pay using the table to calculate.

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