Myths debunked on EMI Moratorium due to CORONA VIRUS
- Mohit Matta
- Apr 3, 2020
- 5 min read
Updated: Apr 4, 2020
As you all must be aware of the outbreak of the COVID-19 (CORONA VIRUS) and the amount of havoc that has been caused by it, not only it has limited the ability to meet in person but has also resulted in a nationwide slowdown, lockdown, and a curfew which has greatly affected the economic activities resulting in suffocation of all the transactions. As a result, the Reserve Bank of India on March 27th, 2020 had announced certain regulatory measures to mitigate the burden and to give some breathing space to us in this pandemic.
Let us first understand what Moratorium Period exactly is.
Moratorium Period is nothing but a specific time period during the loan term in which the borrower of the loan is exempted to pay the principal amount of the loan for a specified period of time. In simple words, it is a waiting period in which the moneylender does not ask us to pay the Equated Monthly Instalments ( Yes the full form of EMI is Equated Monthly Instalments and not Easy Monthly Instalments )
FAQS on RBI EMI Moratorium :
1. Has the RBI ordered the banks to impose the Moratorium Period?
The regulatory measures announced by the RBI were not at all mandatory in nature. It is solely on the banks that if they wish they can impose the moratorium period.
2. Will the Moratorium Period be imposed on its own?
No, the Moratorium Period will not be imposed on its own and you have to contact your respective banks for the imposition of the moratorium period as before taking the loan the banks make us sign the ECS form in which the amount of the EMI automatically deducts from the account provided by you and is credited to your respective bank on a fixed date. The best way of contacting your banks is to send an e-mail to your banks as the banks are shut down and the employees are working from home.
3. Will this EMI Moratorium will affect my credit score?
No, this EMI moratorium will not adversely affect your civil score.
4. What will happen if we do not contact the banks requesting the imposition of EMI Moratorium?
The amount will automatically be deducted from the account if you have sufficient balance in your account.
5. EMI Moratorium is applicable on which loans?
The EMI Moratorium is applicable to all the term loans such as home loan, car loan, personal loan, agricultural loan, etc
6. Will the EMI Moratorium be applicable to credit cards?
No, the EMI Moratorium is not applicable to the transactions done through your credit card or loans taken from your credit card. As the credit cards are categorized as revolving credit.
7. Is the EMI Moratorium applicable to loans taken from online sources?
Yes, the EMI Moratorium is applicable to all the term loans mentioned above advanced from any source whether online or offline.
8. What is the applicability of the EMI Moratorium?
The applicability of the EMI Moratorium period to all the installments that are falling between March 1st, 2020 to May 30th, 2020.
9. Will the installments falling under the moratorium period be waved off?
No, the installments falling under will not be waved off, you have to duly pay the amount borrowed to the banks. Only the time duration or the term of your loan will be extended from 3 months.
For example: If your loan was ending in January 2021 now 3 months will be added in the tenure of your loan and it will then end accordingly.
10. Is the EMI Moratorium interest free?
No, the EMI Moratorium is not interest-free and the interest will still be charged on the outstanding portion accordingly as it was charged before.
11. Are working capital loans covered under the EMI Moratorium?
Yes, the working capital loans are also covered under the EMI Moratorium however, only the interest amount is deferred in the case of such loans, with outstanding as of March 1st, 2020. The accumulated interest will have to be paid after the moratorium period is over.
12. Is the working capital financing eased in the EMI Moratorium?
In respect of working capital facilities sanctioned in the form of CC/OD to borrowers facing stress, the banks may recalculate the ‘drawing power’ by reducing the margins and can also do by reassessing the working capital cycle. This relief shall be available in respect of all such changes effected up to May 31st, 2020.
13. What will happen to the NPA's ( Non-performing asset ) and SMA's ( Special Mention Accounts ) ?
The moratorium is only being provided to fight against the economic fallout from the CORONA VIRUS, it will not be treated as a concession or change in terms and conditions of the loan agreements due to financial difficulty of the borrower.
Below are the contact details of some of the banks and the format of the application that is to be sent to your respective bank if you wish to avail the EMI Moratorium Period.
TATA CAPITAL
Edelweiss
BAJAJ Finserv
RBL Bank
SCB Bank
To - customer.care@sc.com
Axis Bank
Indusind Bank
Deutsche bank
To - premium.care@db.com
CC - patel.kira@db.com
Rattanindia
IIFL
Aditya Birla
Neogrowth
Magma
Clix Capital
Fullerton India
Shriramcity
IDFC First Bank
HDFC Bank
Indiabulls
ICICI Bank
Kotak Mahindra Bank
Format of Application:-
Dear Sir/Ma'am,
Subject- email requesting the Imposition of Moratorium Period on my Loan Account (insert your loan account number or relevant details).
I am sending this email to hereby address you on the following grounds:-
1. That, I have an aforementioned loan account in your bank namely ( insert the details of your bank and branch ) of which I have been regularly paying the equated monthly installments.
2. That, you must be aware of the situation prevailing, the pandemic outbreak of COVID-19 (CORONAVIRUS) it has not only limited the ability to meet in person but it has also resulted in a nationwide lockdown, slowdown, and curfew which has greatly affected the business activities nationwide and has resulted in the suffocation of all the economic transactions.
3. As a result the RBI has provided certain guidelines pertaining to the imposition moratorium period on the account, I request you to kindly impose the moratorium period on my account as per the guidelines issued by the RBI.
Date :
Yours Sincerely
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