GENERAL FAQ’S ON RBI MORARTORIUM ON EMI ON LONG TERM LOANS, WORKING CAPITAL FACILITIES AND OTHERS

At this moment of time when entire country is suffering through chronic setback due to COVID 19- Pandemic and day to day activities including personal finance and business finance both are into disruption, it would be
harsh for everyone to meetup their financial obligations.

In the era of lockdown, there is an obvious disruption in cash flow and in certain cases there is loss of income as well, burden of existing payment obligation will increase this harshness.

Accordingly Reserve Bank of India has announced certain regulatory measures to mitigate this harshness and also tried to ensure the continuity of viable businesses. These regulatory measures will bring relief to those
businesses/ individuals who are into direct impact of this lockdown measures.

Here are some general frequently asked questions related to RBI’s announced regulatory measures concerning EMI Moratorium period:

FAQ 1: Which loan categories are eligible and hence covered for the relief?
Answer:
Eligible Schemes are:

  • EMI on all term loans and cash credit/overdraft
  • Interest on the working capital
  • Dues of Credit Card payments
FAQ 2: Will this relief become burden on the individuals/ businesses after the moratorium period? Whether one time lumpsum payment will be required?
Answer:
No, the moratorium period scheme will result only in the extension in the original period of term loans by 90 days. The repayment on all term loans (including interest) will be extended by 90 days and it shall not be collected as one-time payment from individuals/businesses.Let make this simple with the help of an example:
Suppose an individual’s takes a loan, repayable in 60 installments, the maturity of which falls on 1st March 2025. In this case, the maturity of loan repayable will get extended by 3 more months. Therefore, the new maturity date will be 1st June 2025.
FAQ 4: Is this a waiver of EMIs or a deferment of EMIs?
Answer:
This is not a waiver, but a deferment. RBI has recommended that the repayment schedule and all subsequent due dates as also the tenor for such loans may be shifted across the board by 3 months.”Interest shall continue to accrue on the outstanding portion of the term loans during the
moratorium period,”
FAQ 5: Is rescheduling of term loan only for principal amount or it includes interest also?
Rescheduling of principal can be done for a period of three months falling due between 1st March 2020 and 31st May 2020.
It means, if the last instalment of term loan falls due for payment on 1st March 2020, it will become payable on 1st June 2020 and so on. Accordingly the loan repayment period will extend also.
FAQ 5: What will be the treatment of interest on working capital facilities?
Answer:
The recovery of Interest applicable to cash credit/overdraft on 31 March, 30 April and 31 May 2020 is being ‘deferred’.
However, the entire interest must be recovered along with the interest being applied on 30 June 2020 and in cases, where monthly interest is not being applied, along with the next interest date.
FAQ 6: What about my credit card dues?
Answer:
Yes, The relief is available for credit card payments also.
The overdues in the credit card account do not get reported to the credit bureaus for a period of three months.
However, the interest rate on credit card dues are normally much higher compared to normal bank credit. In this period, although no penal interest will be charged as interest will be charged by the credit card issuer on unpaid amount therefore you should check from your card  rovider to arrive at interest payable.
FAQ 7: Is every bank is eligible to provide these benefits to individuals/businesses?
Answer:
These benefits are to be provided by all banks which are member of Indian Banks Association. However, you should inform your bank to avail this benefit. Some banks have applied this unconditionally whereas in some cases you need to submit online request to your bank and then auto debit will stop.
FAQ 8: Will non-payment result in impact on my credit score?
Answer:
Once relief has been granted by your bank, non-payment will not result in any impact on credit score.