On March 27, the Reserve Bank of India (RBI) said that all lending institutions, including banks and housing finance companies, will have to give its borrowers a three-month moratorium on term loans. The moratorium was for payment of all instalments falling due between March 1, 2020 and May 31, 2020. According to the RBI, the deferred instalments under the moratorium will include the following payments falling due from March 1, 2020 to May 31, 2020: (i) principal and/or interest components; (ii) bullet repayments; (iii) equated monthly instalments (EMIs); (iv) credit card dues.
The country’s largest lender, State Bank of India (SBI), has announced details of the three-month moratorium on its loan EMIs. “The call has to be taken by the borrower. If you have enough cash flow it is advised not to avail of this moratorium. Opt for it only if you are facing a cash flow problem. So if you have given a standing instruction (SI) to SBI to debit the EMI every month, it will continue to happen till you intimate the bank. If you want to opt for the 3-month moratorium on your EMIs, then you will have to mail the bank instructing the same. If you funds in your savings account and have an SI with the bank then money will continue to get debited towards EMI payments,” explained C. S. Setty, MD – Retail & Digital Banking, SBI.
Here is a look at the details of SBI’s moratorium on loan EMIs:
Customer who do not want to defer recovery of instalments /EMI: No action is required. They may continue to pay in usual course.
Customer who wants to defer recovery of instalments/EMI: NACH – Where collections of such instalment / EMI is effected through National Automated Clearing House (NACH), please submit an Application (Annexure-I) along with mandate for NACH Extension-(Annexure-II) to stop NACH for these instalments through an e-mail to the specified email ID (Annexure-III).
Standing Instructions (SI): Please submit an Application (Annexure-I) through an email to the specified email ID (Annexure-III).
Customers who want a refund of the instalment/EMI already paid: Please submit an Application (Annexure-I) through an email to the specified mail ID (Annexure-III)
Impact of Deferment: To enable you to make an informed decision, we furnish here under the impact of deferment:
Interest shall continue to accrue on the outstanding portion of the Term Loan during the moratorium period. The possible impact of the extension of the repayment period has been explained below:
Impact in case of Auto Loan: For a loan of ₹6 Lakh with a remaining maturity of 54 months the additional interest payable would be ₹19,000 approx. equal to additional 1.5 EMIs.
Impact in case of Home Loan: For a loan of ₹30 Lakh with a remaining maturity of 15 years, the net additional interest would be approx. 2.34 Lakh equal to 8 EMIs.