The Reserve Bank of India (RBI) today announced a slew of measures to alleviate financial difficulties arising due to the Coronavirus crisis and subsequent restrictions. One such step was about the 3-month moratorium on term loans and equated monthly instalment payments. In order to have more liquidity in the economy, the central bank also said that depositors of commercial banks including private need worry about the safety of their funds. "For the next three months, no EMI would be deducted from the account of anyone who has a loan outstanding. And all this without any hit on the credit score. EMIs will resume after the moratorium period gets over." This comes as a huge relief for borrowers in the present scenario as the EMIs on loans need to be paid only after 3 months.
“Due to lockdown people may have to go for salary cut, some daily wage workers too are out of job...So, this could be a great relief at this juncture where humanity is going through a great threat, and this will help people in managing their finances better…A welcome step by RBI," Asif Iqbal, Head Research of Escorts Securities said.
No doubt, the government is making all-out efforts on the financial front too. But what does this 3-month moratorium on payment of instalments would mean for loan borrowers? How will it impact you? Here's all you should know.
RBI puts EMIs on hold: What it means for you
• The 3 -month moratorium is for all term loans, which means loans of more than 1 year
• If he or she doesn't pay the loan EMIs for 3 months, then it is not going to impact your CIBIL score. So, relax and take care of rest of your finances
• This is a kind of grace period for all small entrepreneurs and salaried-class people who may face cash crunch due to EMIs
• Banks are not going to impact due to NPAs. No bank NPAs for the next three months due to failed EMIs to the bank by the borrowers
“RBI has taken a very good step as far as cash flow is concerned. But for those who will get their fixed salary monthly this will not be a case of umbrella for them. They should pay EMI on time to avoid any future burden of EMIs after 3 months. But, for small businessmen it is a good step and opportunity to catch up their business. 90 days period is a good time for small earners who are facing EMI burden," Ashutosh Khajuria, Executive director & CFO-Federal Bank said.
• A number of bank officials said that RBI took a good step but it may take some time for banks to implement it, as all banks have to update their IP software and change the monthly date of EMI deduction from all particular loan accounts.
• It is the responsibility of all banks to pass on the benefit to all loan borrowers and customers as ordered by RBI
• Remember, term loan includes all loan including home, vehicle, personal and any other business loan
• For ones who get salary without any deduction, are suggested by the experts to pay their EMIs on time because after 90 days or so, you will have to pay the EMI
• Don’t think about your CIBIL right now
• Home loan EMI interest will also reduce due to the repo rate cut by 75 bps
• If you have cash then you can take a home loan at this point of time
• Good opportunity for home buyers to get reduced rate of interest on home loan
• FD interest might get reduced. But after everything comes back to normal, banks will be on track to provide you rest of all benefits
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