Having EMI on loans or credit card bills due?See how you can benefit from RBI relief measure

With economy reeling under recession, shops shutter down for months, halted factories, delays and cut in salaries, or even layoffs, RBI has extended the EMI moratorium period, time for which borrower may not pay EMI dues on the loan, till 31st Aug 2020(earlier 31st May).

It is a one time measure to help people facing liquidity cruch owing to Covid-19.

Loans Eligible

All terms loans which includes home loan, education loan, auto loan, personal loan are covered under this benefit. The facility is even extended to credit card dues.

Which Banks are Offering

RBI permitted banks and NBFCs to give the benefit of EMI Moratorium but didn’t make it compulsory. So it is with the discretion of banks(and NBFCs) if they want to offer the benefit to their customers.

Most of the nationalised banks and private banks have decided to offer this moratorium benefit to their customers.

Do you automatically become the beneficiary or you need to avail it separately

If your bank is offering EMI deferment, you need to approach it and ask separately to avail this benefit. It will not be automatically extended to you by your bank.

But don’t go immediately, first read this post as it has certain limitations too.

Does it mean you don’t have to pay EMI for 3 months?

It is critical to make it clear that it is just an extension of your EMI(both principal and interest) and not a waiver/cancellation.

The unpaid interest amount will accrue and will get add up in your outstanding amount of loan. It means:-1)Your loan repayment tenure gets extended and EMI remains unchanged.

Or

2)Your EMI increases and loan tenure remains same.

Note:-It’s not waiver but deferment of EMI and your unpaid interest amount will be added to your balance loan amount.

Will it affect your CIBIL Score(individual’s credit score)?

RBI has made it clear that non-payment of EMI dues during moratorium period(till August) will not result in change in terms and conditions of the loan. Therefore, it will not downgrade your CIBIL score.

Should you avail this benefit of EMI moratorium?

Deferring your EMI dues will lead to increase in future EMIs by 1-5% depending on your loan tenure as interest on unpaid dues gets added to your loan amount. In case of credit cards, it is highly recommended that you don’t defer as the interest charges are extremely high.

It is advisable that you opt for this benefit only if you are facing liquidity issues. Better that you continue with regular EMI dues if you have enough savings and can afford it.

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