Bank grant 3-month moratorium to customers on EMI on loans
NEW DELHI: Following Reserve Bank of India’s (RBI) instructions, several leading banks of the country had provided a three-month moratorium to its customers on payment of EMI, interest on loans etc to deal with the current coronavirus pandemic.
The implementation of the package had apparently been delayed due to confusion about the modalities, forcing the finance ministry and the central bank to intervene Tuesday.
The Ministry of Finance directed banks to pass on the benefits to the customers at the earliest and ensure the message is communicated to all branches, said a finance ministry official, who did not wish to be identified.
On Friday, RBI Governor Shaktikanta Das had announced a three-month loan moratorium for all term loans, providing a massive reprieve to borrowers. The loan moratorium meant that borrowers would not have to pay equated monthly instalments (EMIs) either for the loan or on the interest for three months.
It was part of the central bank’s attempts to insulate borrowers from the economic fallout of Covid-19 that has forced many small businesses to shut shop, leading to job losses.
The RBI notification had clarified that interest will continue to accrue on the outstanding portion of the loans during the moratorium period, clearly encouraging those who can afford it to continue paying their EMIs.
It also gave banks the breathing space on default tagging in the event of customers skipping payments. All term loans, including agricultural term loans, retail and crop loans and working capital payments, will be covered by the three-month moratorium, the RBI said.
“All commercial banks, NBFCs (nonbanking finance companies), all-India financial institutions are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020, and May 31, 2020,” the RBI had said on Friday.
The measures came on the day the central bank slashed the benchmark repo rate to a record low to help spur demand when the nation of a billion-plus consumers is to end its Covid-19 lockdown by mid-April as per the current timetable.
Leading banks like Indian Overseas Bank, Indian Bank, UCO Bank, Canara Bank, Punjab & Sind Bank, Syndicate Bank and the IDBI Bank took to Twitter to inform their customers that have provided a three-month moratorium on payment of EMIs, interest on loans. terms loans etc.
”In terms of Covid 19- Regulatory Package, borrowers are eligible for moratorium/ deferment of installments/EMIs for Term loans falling due from 01.03.2020 to 31.05.2020.”
