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Old 27th March 2020, 10:42   #1
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Default Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

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The Reserve Bank of India (RBI) today in a press conference announced moratorium on term loans for up to three motnhs. The governor in its statement said, "moratorium on term loans. All commercial, regional rural, and NBFCs and small finance banks are being permitted to allow 3 month moratorium on payment of instalments in respect of all term loans outstanding on 31 march 2020."
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At the presser, Das also announced:
Auction of targeted long term repo operations of 3-year tenor for total amount Rs 1,00,000 crore at floating rate.
Reduction of CRR for all banks by 100 basis points. Will release Rs 1,37,000 crore across banking system.
Accommodation under Marginal Standing Facility to be increased from 2% from SLR to 3% with immediate effect till June 30. It will release Rs 1.37 lakh crore into the system.

Combined, these three measures will make available a total Rs 3,74,000 crore to the country's financial system.
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Old 27th March 2020, 10:51   #2
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

Finally something to cheer about. I don't know if it is binding on the individual banks to pass on this measure to customers. Some banks in the past have not passed on the benefits of the lowering interest rates to customers. In fact you need to go and ask them and after a "reasonable" fee, they would pass on the benefits. Even then they come up with all kind of excuses like " why don't you opt for such and such scheme instead of opting for a moratorium?" . I do hope that this time they do it without any fuss.
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Old 27th March 2020, 11:59   #3
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

Just so that I understand it correctly, does it mean home loan EMIs wont be deducted from our bank accounts for the next 3 month? Including HDFC home loan EMIs ? Or am I dreaming ?
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Old 27th March 2020, 12:03   #4
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

^^RBI has suggested the banks for this moratorium. Now it’s Upto the banks as to decide for their customers. They may also classify on the nature of loans like home loan, personal loan etc; if they plan to dole out this moratorium. You should wait till your bank comes forward and offers clarity.

Banks should now pass the benefits of today’s rate cut. However, those living on the interest from their deposits, like the pensioners will have a tough time.

Last edited by saket77 : 27th March 2020 at 12:09.
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Old 27th March 2020, 12:13   #5
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

Correct, most likely it will be on demand basis and they may not apply on all the loans. Let’s wait for a while.

And keep in mind, whatever EMI’s we won’t be paying, there will be an interest on that so it’s not going to be free. And this interest can be higher than usual or same depending on the type of loan.

Essentially, opt for this if absolutely must.
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Old 27th March 2020, 12:42   #6
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

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Originally Posted by hondafanboy View Post
Just so that I understand it correctly, does it mean home loan EMIs wont be deducted from our bank accounts for the next 3 month? Including HDFC home loan EMIs ? Or am I dreaming ?
Not decided yet. But if they do, it wont any kind of savings since the loan tenure will extended to 3 more months.
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Old 27th March 2020, 12:47   #7
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

For a home loan of Rs. 40 Lacs - 25 years tenure of 1 year vintage, the principal component would be approx Rs. 4500/- and EMI would be Rs. 31,000/-

What this moratorium would essentially mean is that you need not pay that Rs. 4500/- approx. for three months whereas the balance interest of Rs. 26,XXX would be charged for the all the three months albeit which would work out a little higher in value in the subsequent months since there would not be any principal deduction. The interest will be charged to your account but you need not service it. However, your EMI tenure would increase by a proportionate period.

And the interesting part of this concession is that your loan account will not be classified as DPD or substandard due to the non repayment and zero impact on CIBIL.

Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more-screenshot-20200327-12.46.51-pm.png

What needs to be seen is whether this will take place automatically or based on the bank/customer confirmation.

Last edited by Warwithwheels : 27th March 2020 at 12:53.
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Old 27th March 2020, 13:24   #8
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

*EMI deferral: Is it automatic, are credit card bills suspended, what for businesses, and other questions on RBI moratorium answered*

*Q: My EMI is due soon. Will the payment not be deducted from my account?*

A: The RBI has only allowed banks to allow a moratorium. Individual banks will have to allow suspension of EMIs. The borrower will have to request the bank and show that his or her income has been impacted by the coronavirus disruption. This means that unless you have specific approval from your bank, your EMIs will still be deducted from your account.


*Q. Is this a waiver of EMIs or a deferment of EMIs?*

This is not a waiver, but a deferment. You will have to pay the EMIs at a later as decided by the bank. The RBI has told banks to have board approved policies in place on moratorium/deferment.


*Q. Which banks can offer this deferment to their customers?*

All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) included


*Q: Does the moratorium cover both principal and interest?*

A: Yes. It does. If announced by your bank, you can forego payment of your entire EMI, including payment and interest.


*Q. What kind of loans does the moratorium cover?*

The RBI policy statement explicitly mentions term loans, which includes home loans, personal loans, education loans, auto and any loans which have a fixed tenure. The also include consumer durable loans, such as EMIs on mobiles, fridge, TV etc

*Q: Does the moratorium cover credit card payments?*

A: Since credit cards are defined as revolving credit and not term loans, they are not covered under the moratorium.

*Q: I have taken a business loan. Can I not pay my EMI?*

A: The moratorium has been allowed on retail loans.

*Q: What has the RBI announced for businesses?*

A: The RBI has allowed deferment for interest payments for all working capital loans taken by businesses. The accumulated interest for the period will be paid after the expiry of the deferment period. Moratorium/deferment will not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.
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Old 27th March 2020, 13:59   #9
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

As all things earlier, big splash headline. But the devils lurk in the details. With all the conditions and giving free hand to banks, there will be little impact of this for the folks paying the home/educational loans.
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Old 27th March 2020, 17:01   #10
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

RBI issues clarification on the same:

See footnote on page 1 - RBI has clarified that credit card dues are included in the term loans on which banks can offer a 3-month moratorium.

Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more-rbi1.jpeg

Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more-rbi2.jpeg

Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more-rbi3.jpeg
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Old 27th March 2020, 19:02   #11
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

How is 01-Mar-2020 going to help? Almost all of the EMIs would have been paid already. Are they going to refund the the paid EMI amount?

The only hope is the banks pass on the reduction in interest rate. But given the history of banks ignoring RBI's request, dont think anything will happen on that front either.

The best bet is to take a loan insurance that covers job loss.
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Old 27th March 2020, 19:18   #12
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Originally Posted by Turbanator View Post
And keep in mind, whatever EMI's we won't be paying, there will be an interest on that so it's not going to be free. And this interest can be higher than usual or same depending on the type of loan.

Essentially, opt for this if absolutely must.
Am sorry but as far as I understand, there will not be any kind of interest charged for these. It's plain and simple extension to the EMI period. No hidden interest charges, nothing.

Also note that by default, banks are not going to debit your accounts/realize your cheques irrespective of you having given standing instructions. They will voluntarily not debit your accounts.
However, if you wish the banks to debit your accounts during these three months, it would be considered as pre-payment.

This is the explanation given on multiple news channels. If there's anything contrary to this, request members to please correct me!

However, as someone asked before, what happens if the amount is already debited for March 2020 needs to be clarified.
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Old 27th March 2020, 19:34   #13
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

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Originally Posted by abhi7013 View Post
Also note that by default, banks are not going to debit your accounts/realize your cheques irrespective of you having given standing instructions. They will voluntarily not debit your accounts.
However, if you wish the banks to debit your accounts during these three months, it would be considered as pre-payment.

This is the explanation given on multiple news channels. If there's anything contrary to this, request members to please correct me!

However, as someone asked before, what happens if the amount is already debited for March 2020 needs to be clarified.
How I wish its as per your interpretation. Please check one of the Q&A posted earlier. The banks/RBI expect the affected person to "prove" loss of income to claim this. It doesnt automatically apply to all loans.

Because of the above
a. 01-Mar-2020 is useless. I am surprised these guys didnt come up with 01-Jan-2020 to 31-Mar-2020.
b. The question of handling March EMI doesn't arise.

By the time the banks come up with a policy and someone will be able to use it, it will be May 2020 and the duration will expire.
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Old 27th March 2020, 19:55   #14
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How I wish its as per your interpretation. Please check one of the Q&A posted earlier.
And were the Q&A taken from the RBI or any bank website?
Its not my interpretation, its what i heard from many news channels and websites (which are the only sources most of us can fall back on). Anyways, things should clear up in a day or two when banks themselves start giving statements and hope they do so soon.
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Old 27th March 2020, 20:52   #15
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Default re: Covid-19: RBI allows 3 month EMI holiday, lowers interest rates & more

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Originally Posted by abhi7013 View Post
Am sorry but as far as I understand, there will not be any kind of interest charged for these. It's plain and simple extension to the EMI period. No hidden interest charges, nothing.
It is only an EMI Holiday and not an interest holiday. The interest will be charged to your loan account at the end of the month as usual. Just that you can opt out to pay the EMI and still have no impact on your credit history.

To put it in lay man terms, say you borrow INR 1,00,000 @ 10% interest for 1 years, the following will be the impact:

Without EMI Holiday

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With EMI Holiday

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The impact would be approx Rs. 2,300/- for a loan amount Rs. 1,00,000/- @10% for a tenure of 1 year

Last edited by Warwithwheels : 27th March 2020 at 20:55.
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