What is RBI’s 3 Month Moratorium Period?
Last Updated : April 2, 2020, 7:22 p.m.
The Coronavirus Outbreak has become a major concern worldwide including India. India is also facing financial issues after lockdown and so the citizens of India. Therefore, the Reserve Bank of India has issued certain guidelines that will help to remove the financial burden from the individuals. In the Guidelines RBI says that an individual having any type of loan or debt on himself can delay the payment of EMIs for 3 months and it will not affect the CIBIL Score of the individual. This guideline is known as the RBI 3 Months Moratorium Period. In a lawful term, Moratorium means a legal authority is given to the debtors to postpone the repayment of the debt. Even the bank is not eligible to charge any extra fees on the delayed payments. The credit card bills are also covered under this guideline.
Advantage of 3 Months Moratorium Period
Removes Financial Burden :- The main reason to provide the Moratorium Period is to lower down the financial burden of the individual that is happening due to lockdowns and Coronavirus. Once you skip the repayment of debt for 3 months, you will have enough funds to fulfill other basic necessities.
No Affect on the CIBIL Score :- Usually if you skip the EMI payment or Credit card bill payment then it has a negative impact on your Cibil Score . But if you skip the EMI payment and Credit Card bill payment during the 3 Months Moratorium Period then it will not affect your Cibil Score. This facility is given to the debtors for a period of 3 months only.
No Extra Fees will be Imposed :- There are some banks that charge late payment fees if you forget to pay the EMI or credit card bill. But during the period of 3 months of moratorium if you skip the payment, then the bank will not charge any extra fees for the late payment if you make payment even after 3 months.
The Reason why 3 Months Moratorium Period is Not Good For the Individual
The 3 Month Suspension is given to fight the financial crisis but this facility has an adverse effect on the individuals. There is no guidelines related to the Interest chargeable on the outstanding EMI or Credit Card bill amount and that means that 3 months leverage will make you pay an extra amount of interest with the credit card bill and EMI after 3 months. Therefore, it is better to clear the debts on the due date if you have enough funds otherwise you will have to pay an extra amount of interest later. So the 3 Months Moratorium might prove a disadvantage for you.
Take Away
Now you have got your answer that is the meaning of the 3 Month Moratorium period given by RBI and it totally depends on you whether to use this leverage or not. It will help you to fight the financial crisis but on the other hand, the 3-month suspension will make you pay an extra amount of interest on the outstanding bill amount. The ball is in your court and you have to decide whether to use this facility or avoid it.