Is it a complete waiver of 3 EMIs for March, April, May 2020?
Is it a complete waiver of 3 EMIs for March, April, May 2020?
What is a scheme announced by RBI for moratorium period for housing loan borrowers?
Are you liable to pay your 3 EMIs for your housing loan after 3 months moratorium announced by Finance Minister?
Is it beneficial to accept moratorium for 3 months?
(This article is written for layman and students.)
· What is a scheme announced by Finance Minister on 27th March 2020?
RBI regulates the decision making of all banks in terms of their decisions as to waiver of loans, communication of defaults in repayment by borrowers to CIBIL etc. RBI issued a notification on the basis of regulatory measures announced to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. Therefore, RBI has permitted all banks and NBFC’s to grant a moratorium of three months on payment of all instalments1 falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
· Is it a complete waiver of 3 EMIs for March, April, May 2020?
No. It is not a waiver at all. Every borrower is liable to pay all EMI and interests etc. No Waiver of even single rupee is announced or granted.
· Who is decision making authority?
RBI is authorised the Banks to take decision as to granting moratorium to borrowers. The central government or state government or RBI will not be taking decision for granting the moratorium. However, RBI has asked Banks to form a uniform policy for such moratorium and its grant to make it a rational measure.
· What will be tenure of repayment after opting the moratorium?
The tenure of repayment will be extended by further period. Borrower will be charged for the said extended period.
· What will be the impact on interest, EMIs and my liability after opting the moratorium?
Many Banks have formed different policies for the said moratorium. Majority of Banks are going to capitalise the amount equivalent to three EMIs and charge interest thereon. Therefore the amount of principal in your loan account will be increased by amount equivalent to three EMIs. The due date of next EMI will be in June 2020. You will be charged to interest for the said period on enhanced principal amount.
Lets take example. If you have borrowed housing loan from SBI. Your balance principal amount is INR One Crore. Your EMI is 96 lakhs per month. And the remaining maturity period is around 15 years. If you opt for this moratorium scheme. Then you need not pay EMI for March, April and May 2020. Your next EMI will be due in June 2020. However, this amount of INR 2,88,000.00 (3 EMIs) will be added to your principal amount. This will add 7.72 lakhs to your liability. It will increase your 8 EMIs. Yes… moratorium of 3 EMIs will add burden on 8 additional EMIs. However, this will be due after 15 years where value of money would have decreased to certain extent.
· What if you have already paid EMI for March 2020?
Few Banks have announced that they are ready refund your EMI for March 2020 if already paid (like SBI.) Few Banks have announced the scheme only for unpaid EMIs. It means that you will not be entitle for 3 months moratorium (like HDFC)
· How to opt for this scheme?
RBI has not notified any unique method for opting or non-opting this moratorium measure. Every Bank is deciding its own course or line of action of the same. For eg. SBI has announced that you need to fill prescribed form if you want to opt for scheme and if you do not want to opt for this scheme do not do anything.
Adv. Swaroop Godbole
lexrem Partners
www.lexrem.com