This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts until the above mentioned time. The loan EMI payments will restart only once the time period expires.
The Reserve Bank of India (RBI) today in a press conference announced moratorium on term loans for up to three motnhs. The governor in its statement said, “moratorium on term loans. all commercial, regional rural, and nbfcs and small finance banks are being permitted to allow 3 month moratorium on payment of instalments in respect of all term loans outstanding on 31 march 2020.”
This would mean that individuals EMI repayments of loans taken would not be deducted from their bank accounts till the above mentioned time. The loan EMI payments will restart only once the time period expiries.
The relief has been come after the finance ministry wrote to the central bank suggesting a moratorium on EMI, interest and loan repayments for few months, as per an Economic Times report.
There have been requests from various stakeholders to defer the EMI payments as the country is going through a 21-day lockdown due to spread of COVID-19.
This will come as relief as many individuals, especially self-employed individuals, were staring at income loss and would have found it difficult to service their loans such as car loans, home loans etc. If they had missed any EMI payment they were risking adverse action by banks which could result in a hit on their credit score.
As per Reserve Bank of India (RBI) rules, any default payments have to be recognised within 30 days and these accounts are to be classified as special mention accounts.