Budget 2020

What is EMI moratorium? All you need to know about moratorium on loan EMIs

The Reserve Bank of India, in March this year, offered a relief measure to the borrowers in the form of EMI moratorium on all term loans for three months till May 31, 2020. This was further extended by another three months till August 31, 2020. In total, the central bank has offered a moratorium of six-months between March 1, 2020 and August 31, 2020. Here is all you need to know about it.

  1. What is moratorium on loan EMI given by RBI?
    The Reserve Bank of India (RBI), as a relief measure to help borrowers tide over financial troubles caused due to the pandemic, had offered a six-month moratorium on all loan equated monthly instalments (EMIs) between March 1, 2020, and August 31, 2020. The moratorium was available on all loans including home loans, personal loans, education loans etc., and credit card dues. During the moratorium period, borrowers were not required to pay EMIs on their loans.
  2. Who is eligible for EMI moratorium?
    As per the RBI circular dated March 27, 2020, all individual borrowers were eligible to opt for loan moratorium on EMI whose loan was outstanding as on March 1, 2020.
  3. How does loan moratorium work?
    Borrowers who had opted for the loan moratorium were not required to pay EMIs during that period. During the moratorium period, the interest is not waived off and will continue to accrue on the outstanding amount. Further, individuals have to pay additional interest on the months for which the EMI moratorium was taken.
  4. How will opting for moratorium affect my loan EMI?
    As mentioned above, the interest on the loan is not waived during the moratorium period and will continue to accrue on the outstanding amount. You will have to pay additional interest on months for which moratorium on EMI was opted for either by increasing the tenure of the loan or EMI instalment amount.
  5. How will loan moratorium on EMI impact my credit score?
    As per the circular issued by RBI dated March 27, 2020, opting for EMI moratorium will not negatively impact the credit score or lead to credit downgrade of borrowers.