The current conditions in the country are not hidden from anyone. There is a medical emergency in India at the moment and Prime Minister Narendra Modi has announced a lockdown across the country by 14 April. After this announcement, everything has come to a standstill in the entire country except production and supply of essential goods. In such a situation, people who have taken loan, they are worried and it is possible to be.
Those who have taken loans, they are worried about the lockdown in the business. If they are not making any profit, how will they pay EMI?
Seeing the seriousness of the matter, the central government has found a solution. On the instructions of the central government, the Reserve Bank of India has asked banks and NBFC companies not to take any EMI till June 2020.
Looking at the lockdown across the country, it is a relief for those customers who are having difficulty in paying EMI. Under this RBI directive, banks and NBFCs will extend a moratorium of three months to all those customers who have taken a term loan.
In addition, the RBI has directed credit rating agencies such as CIBIL and Equifax that the credit report of customers should not be affected by non-payment of EMI during the period of deferment. Let us tell you how it is beneficial for small traders, who have a business loan account.
What type of loan accounts will benefit from this?
According to a circular issued by RBI, banks and NBFCs will postpone the EMI of term loans from March 1 to May 31, 2020. Now these term loans include home loans, vehicle loans, business loans, personal loans, crop loans and agricultural term loans. Apart from this, EMI of credit card issued by banks will also not be collected. Delay in these three months will be given on both principal and interest. The customer will not have to pay EMI during this period.
Will the loan interest be forgiven?
Moratorium means that you will not have to pay EMI and no penalty will be incurred in that period. This is not a rebate, only a concession has been given to give relief to customers. According to the notification issued by the RBI, the term loan payment will be postponed for three months. That is, you will repay the EMI of these three months later. But interest will be charged on the outstanding amount during this period.
The RBI also said that in view of the coronavirus
virus epidemic, the moratorium period will be provided to all the customers so that there is no shortage of cash in the country. Note that avoiding EMI is not an apology nor will there be any change in terms and conditions of term loan.
Not only this, the salary of many employed people will also be cut or there will be delay in arrival. In the wake of the crisis of Coronavirus (Covid-19), his job can also go. Therefore, this prolongation will benefit those customers who are struggling with money. They can start repaying EMI again after May 31.
Customers have to understand one thing that this delay is only from 1 March to 31 May 2020. For example, if you have taken a business loan and you have to pay EMI in the first week of the month and you have paid the EMI of the business loan in the month of March, then you will get only two months benefit.
Do you need to pay EMI next month?
It is not that you will not have to pay EMI or Credit Card from March 1 to May 31, 2020, even if you want to pay. Banks and NBFCs are yet to give more clarity on the matter. But deferment is an option. If the customer still wants to keep paying his EMI, he can. Cleanliness is expected from every lending institution. They have to make their own scale. RBI has asked banks and other lenders to give rules approved by the board regarding deferment so that customers can be given relief.
Significantly, the RBI has given authority to all lenders to decide the conditions. However, lenders will also have to bring a scale for the postponement period.
Who can give deferment?
All banks and financial institutions, including non-banking finance companies (NBFCs), finance companies, regional rural banks, finance banks, local area banks and small finance banks can provide deferment. If you have taken an unsecured business loan or home loan, then you will be given an extension of three months.
Should you choose it
As we said above, deferment does not mean relaxation. Therefore, interest will be charged even during the period of deferment. In simple words, whatever interest will be there for three months, it will be added to the outstanding amount and after the end of the period, it will put an extra burden on you. After this period you will have to repay this amount in EMI itself. So, if you are struggling with cash shortage then only then we will advise you to choose a moratorium. Otherwise you can continue repaying your EMI as before.
In particular, this is a moratorium period, not an interest pardon. Thus, you will be charged interest. Therefore, those who cannot pay EMI during these three months, should choose this option only. Otherwise continue paying EMI to avoid additional burden