Providing major relief to the common man, the Reserve Bank of India (RBI) on 27th March allowed a deferment of EMI on all loan repayments.
This allows the borrowers not to pay any EMI (equated monthly installments) on any loans until 30 June 2020. This will a very big bring relief to all the borrowers during this crucial time, including those who persons have taken home loans, education loans, auto loans, agricultural term loans, crop and retail loans to their names. It will also apply to credit card dues.
The relief will be available for all loans taken from any bank/financial institution for all loans outstanding as on 1 March 2020.
In addition to the above, the RBI has also clarified that the rescheduling of payments will not be qualified as default and there will be no risk of the account being classified as an NPA. This means that the non-payment of equitable monthly installments for the next three months will not adversely affect the credit history of the beneficiaries.
In its statement, the Reserve bank of India said, “All commercial banks (including regional rural banks, small finance banks, and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) are permitted to allow a moratorium period of three months for payment of installments in respect of all term loans outstanding on March 1, 2020.”
The regulator added, “Accordingly, all the repayment schedule and all the subsequent due dates, and also the tenure for such loans, maybe shifted across the board by 3 months.”
As per the notification issued later on in the day has clarified that the interest will continue to be accrued on the outstanding amount of the loans during this moratorium period of three months.
“Instalments will include the following payments falling due from March 1, 2020 to May 31, 2020:
(i) Principal and/or interest component of loan;
(ii) Bullet repayments;
(iii) EMIs (Equated Monthly installments);
(iv) Credit card bills,”
Said in the RBI Notification.
As per the data available with Reserve Bank of India as of 31st Jan 2020, over Rupees 13 lakh crore of housing loans and Rupees 2 lakh crore of auto loans were outstanding.
Besides retail borrowers, micro, SMEs and large companies will also get benefit from the Reserve Bank’s relaxation of loan repayment.