The corona virus/COVID-19 pandemic has caused distress to all of us. Especially people who have to pay EMIs on their loans but have either lost their job or cash flow in their businesses has reduced are finding it difficult to pay loans. As a temporary relief, Reserve Bank of India (RBI) announced that banks can offer a 3 month moratorium on all outstanding term loans falling due between Mar 1 to May 31. So you can postpone EMI or loan payment because of Corona.
Type of loans included
Home, personal, education and auto loans are included in this. You eventually will have to pay the loan. It is not that your loan instalments for 3 months are being pardoned, they are just being delayed.
How to apply?
- If you have a loan with SBI, then you can opt for the loan moratorium scheme as follows:
- Submit an application form on email in the prescribed format that is available here
- Also, submit National Automated Clearing House (NACH) extension mandate form.
- If you have a loan with HDFC, then you need to apply on the bank’s website or call 022-50042333, 022-50042211 and follow the instructions
- If you have a loan with Canara Bank, then you should have received an SMS with instructions from the bank. Please refer to the SMS or contact the bank directly
- If you have a loan with IDFC First Bank, then you need to send an email application with loan details to the bank for taking the moratorium.
But should you opt for this moratorium on your loan?
If you do not have incoming cash flow to pay the EMI, then this is a good opportunity. However, you should be aware that if you take a moratorium on the loan your total interest cost will increase. Because banks will charge the interest for 3 months or the number of months you avail the moratorium. Hence, you will end up paying more than if you were to not take moratorium. So be careful and figure out the additional interest you will be paying if you avail the moratorium.