RBI’s EMI Moratorium: Know What will happen to your House loan, Personal Loan, Credit Card Payment and CIBIL Score

On 27th March 2020, the Reserve Bank of India (RBI) announced to provide a major relief to the common man by allowing a deferment of all loan repayments till 30 June 2020. Let’s take a look at all the important points which were made under this announcement

Click here to read the Official Announcement

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COVID-19 – Regulatory Package

The RBI has announced a  moratorium which will allow the borrowers to not pay their loan EMIs for the next three months. This move will majorly bring relief to borrowers having home loans, auto loans, education loans, agricultural term loans, retail, and crop loans to their names and credit card dues will also be cover. This moratorium will be applicable for all loans outstanding as of 1st March 2020, taken from any financial institution in India.

The regulator has announced that “All commercial banks which include regional rural banks, small finance banks, and local area banks, as well as co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions), are directed to permit to a moratorium of three months on payment of installments in respect of all term loans outstanding as on March 1, 2020.” But interest will continue to accrue on the outstanding portion of the loans during this period.

Principal and Interest components, bullet repayments, Equated Monthly Installments, Credit Card Dues all these installments will be included falling due from March 1, 2020, to May 31, 2020.

Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA)

This moratorium is announced to provide relief to the borrowers in this tide over the economic fallout from COVID-19, thus it will not in any way be treated as a concession or will not change or hamper the terms and conditions of loan agreements due to financial difficulty of the borrower.

RBI has also clarified that the rescheduling of payments or delaying in payments by the borrower will not qualify as default and no such account will be classified as a non-performing asset. This means that this default in repayment will not be counted as default and also it will not hamper the credit history of the borrower.

 Other Conditions

• Lending institutions are instructed to frame Board-approved policies for providing the moratorium to all eligible borrowers.
• If the exposure of a lending institution to a borrower is `5 crore or above as, on March 1, 2020, the bank is instructed to develop an MIS on the reliefs provided to its borrowers.
• The moratorium will come into force with immediate effect. All the financial Institutions Board of Directors and the key management personnel of the lending institutions shall ensure that the above instructions are properly communicated down the line in their respective organizations and clear instructions are issued to their staff regarding their implementation.

Statistics of Loan Outstanding 

The data given below is the statistics of outstanding loan as of January end 2020,

• Over Rs 13 lakh crore of housing loans.
• Around 2 lakh crore of auto loans.
• Other sectors like industry, services, agriculture, and Personal loans were Rs 89 lakh crore. 

Frequently Asked questions:

Q. Who qualifies for this Moratorium?

Ans. Borrowers who have taken loan from any Financial institution in India and have their due till March 2020, are eligible for this moratorium.

Q. What types of loans come under this announcement of moratorium?

Ans. All kind of loans wheather Term loan or working capital loans will be covered under this announcement.

Q. Is credit card due comes under this moratorium?

Ans. Yes! Credit card due will also come under this moratorium.

Q. For how many months will this moratorium be applicable?

Ans. This moratorium will be applicable till 31 May 2020.

Q. Is it loan waiver or loan extension?

Ans. It is not a loan waiver as clearly mentioned in the official press release that this moratorium in no way will hamper the terms and conditions on which the loan was taken but it is a loan extension given due to coronavirus outbreak.

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• RBI Grade B Phase I with Video Solutions 2020 Online Test Series
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