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RBI's 3-month EMI, Loan moratorium: Things to note

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RBI's 3-month EMI, Loan moratorium: Things to note

Last updated: June 10 2020
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  • #11

    #11

    Re : RBI's 3-month EMI, Loan moratorium: Things to note

    RBI's 3-month Moratorium is a permission and not an order to the banks

    The RBI has permitted banks to allow their borrowers to postpone the repayment by 3 months under the moratorium. However, the decision is solely at the discretion of banks and they may or may not allow their borrowers to do so.
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    • #12

      #12

      Re : RBI's 3-month EMI, Loan moratorium: Things to note

      Make banks comply with RBI moratorium on EMIs: Manish Tewari

      Party spokesman Manish Tewari made this demand to the ministry amid reports that many banks were proceeding to follow the regular EMI deduction schedule despite the RBI’s nod for deferring them for three months.

      ET Bureau|
      Last Updated: Apr 01, 2020, 12.29 AM IST

      PTI


      Migrant workers are also being looked after. With strong will, you can solve many problems,” she tweeted.

      New Delhi:Congress urged the Union finance minister to intervene not only to ensure banks comply with the Reserve Bank of India’s directive for deferring payments of equated monthly instalments (EMIs) on all loans for three months due to the Covid-19 emergency but also to provide subvention of interest rate of the deferred EMIs.

      Party spokesman Manish Tewari made this demand to the ministry amid reports that many banks were proceeding to follow the regular EMI deduction schedule despite the RBI’s nod for deferring them for three months. He demanded that the FM immediately make the banks issue the necessary notifications in line with the RBI-advised three-month moratorium and stressed that the subvention of interest rate on EMIs for the threemonth period was equally important to ensure the intended relief for customers.

      The main opposition party also urged the Union ministries of finance, agriculture and food supplies to coordinate an action plan to help the farmers who are finding it difficult to harvest, store and market their rabi crop.

      Meanwhile, All India Congress Committee general secretary Priyanka Gandhi Vadra complemented the governments of Congress-ruled states for their efforts against Covid-19. “The state governments of Rajasthan, Punjab, Chhattisgarh have been fully prepared to face this crisis.

      Ration is reaching door to door.

      Many private hospitals have been taken over by the government for this phase. Hotel rooms are being converted into isolation wards. The state’s employees have been taken care of.

      Migrant workers are also being looked after. With strong will, you can solve many problems,” she tweeted.

      Congress’s Demand:
      Congress’s demand comes after reports that many banks are proceeding to follow the regular EMI deduction schedule despite RBI’s nod for deferring them for 3 months.

      Tewari demands that FM immediately make banks issue the necessary notifications in line with the RBIadvised 3-month moratorium and stresses that subvention of interest rate on EMIs for 3-month is equally important for relief to customers.










      https://economictimes.indiatimes.com...w/74921089.cms
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      • #13

        #13

        Re : RBI's 3-month EMI, Loan moratorium: Things to note

        RBI's loan EMI moratorium proposal for borrowers: Here's all you need to know

        Sunil Mehta, Chief Executive, Indian Banks’ Association (IBA)answers some common questions regarding the 3-month moratorium on loans announced by the Reserve Bank of India

        ET Online|
        Last Updated: Apr 01, 2020, 09.28 AM IST




        Borrowers have a lot of questions regarding the three month moratorium on loans announced by the Reserve Bank of India last week. The RBI allowed all lending institutions to offer a moratorium to borrowers on repayment of all term loans. The moratorium also covered credit card dues.

        The moratorium was for payment of all instalments falling due between March 1, 2020 and May 31, 2020. However, it was also stated that "Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium."

        Sunil Mehta, Chief Executive, Indian Banks’ Association (IBA)answers some common questions regarding the above on the Central Bank of India and Oriental Bank of Commerce websites.
        1. Why RBI has announced the relief package?
          Reserve Bank of India has announced certain regulatory measures to mitigate the burden of debt servicing brought about by disruptions on account of Covid-19 pandemic and to ensure the continuity of viable businesses. It was felt that there may be a temporary disruption in the Cash Flows, and in some cases loss of income, for the businesses/individuals and the present measures work to bring relief to those businesses /individuals.
        2. Which are the facilities eligible for availing the benefits under the RBI Covid19 regulatory package and whether the facility is extended across the board to all borrowers?
          All Term Loans (including Agricultural Term Loans, Retail, Crop Loans and loans under Pool Purchases) and Cash Credit/Overdraft are eligible to avail the benefits under the package. This is available to all such accounts, which are Standard Assets as on 1st March 2020. Further, to avoid unnecessary paperwork the facility has been extended across the board to all the borrowers by extending repayment of Term Loan instalments (includes interest) by 90 days. The original repayment period for Term Loans will get extended by 90 days e.g. a loan repayable in 60 instalments maturing on 1st March 2025 will mature on 1st June 2025.
        3. Is rescheduling of payments applicable for all kinds of Terms Loans?
          It is applicable for all Term Loans in all the Segments, irrespective of the Segment and the tenor of the Term Loans.
        4. Is rescheduling of Term Loans only for Principal amount or it also includes interest?
          Rescheduling of Principal can be done for a period of three months falling due between March 1, 2020 and May 31, 2020. For example, where the last instalment of a Term Loan falls due for payment of on say 1st March 2020, it will become payable on 1st June 2020. For EMI based Term Loans, it will be three EMIs falling due between 1st March 2020 and May 31st, 2020 and the tenor will be extended by three months and have to be repaid during the extended period, as per the example under (2) above. For other Term Loans, it will be all the instalments and Interest falling due during the same period, irrespective of the tenor of payment i.e. Monthly, Quarterly, Half Yearly, Annually, Bullet Payment etc. For Term Loans, where the repayment has not commenced, the interest portion for three months alone needs to be reckoned.
        5. What happens if the extended Tenor of Term Loan goes beyond the maximum period stipulated for a Product or as stipulated in the Loan Policy?
          This can be extended for all such Term Loans without the need for seeking deviations or approvals.
        6. What will be the treatment of interest on the Working Capital facilities?
          The recovery of Interest applied to Cash Credit/Overdraft on 31st March, 30th April and 31st May 2020 is being ‘deferred’. However, the entire interest must be recovered along with the interest being applied on 30th June 2020 and in cases, where monthly interest is not being applied, along with the next interest date.
        7. What will be the impact of this relief by RBI on borrowers as far as reporting of default is concerned?
          Any delay in payment leads to default and gets reported to Credit Bureaus. For business loans of Rs. 5 Crores and above, the Banks report the overdue position to RBI also through CRILC. As a result of this relief package, the overdue payments post 1st March 2020 will not be reported to Credit Bureaus/ CRILC for three months. No penal interest or charges will be payable to the Banks. Similarly, SEBI has allowed that Credit Rating Agencies (CRAs) may not consider the delay as default by listed companies if the same is owing to lockdown conditions arising due to Covid-19.
        8. That means Businesses/ Individuals should necessarily take the benefit?
          You may take the benefits under this package if there is a disruption in your cash flows or there is loss of income. However, you must take into account that the interest on the loans, though not mandatorily payable immediately and gets postponed by 3 months, continues to accrue on your account and results in higher cost. To give you a perspective, suppose your loan outstanding is Rs 100,000 and you are charged 12% rate of interest on your loans, then every month you are liable to pay Rs. 1000 as interest. In case you opt not to service the interest every month, you are liable to pay interest at 12% p.a. and accordingly you will pay Rs. 3030.10 at the end of 3rd month. Similarly, in case the interest rate is 10%, you are required to pay Rs. 833 p.m. or Rs. 2521 after three months.
        9. Should I get upset if any Bank Staff or its collection agent approach me for repayment?
          You should not get upset and tell Bank Staff/ Collection Agent that you want to avail the benefit being extended under regulatory package.
        10. What about my Credit Card dues?
          The relief is available for Credit Card payments also. In case of Credit Card dues, there is a requirement to pay minimum amount and if it is not paid the same gets reported to Credit Bureaus. In view of the RBI Circular, the overdues in the Credit Card account donot get reported to the credit bureaus for a period of three months. However, interest will be charged by the Credit Card issuer on unpaid amount. You should check from your Card provider to arrive at interest payable. Although no penal interest will be charged during this period, but you must remember that the interest rate on Credit card dues are normally much higher compared to normal bank credit and you should take a decision accordingly.
        11. What about interchangeability being permitted from NFB to FB or FB to NFB for businesses?
          The interest applied on the Fund Based portion of Interchangeability availed during the said period of 1st March to 31st May 2020 will be eligible for moratorium. In respect of new sanctions accorded from 1st March and availed during the period, the interest applied on the Fund based portion would be eligible.
        12. In what other ways, businesses have been given relief
          The businesses may request the Bank to re-assess their Working Capital requirements on account of disruption of their cash flows or elongation of Working Capital Cycle. They may also request for reduction in margin on NFB facilities (LCs/ BGs etc) or also relief in Security. Decision will be taken by the Bank branches on case-to-case basis based on the genuineness of the request.
        13. Are NBFCs/MFIs/HFCs eligible under the” Easing of Working Capital Financing”?
          At present, they are not being considered under the Scheme. However, RBI has made provision for sufficient liquidity support to these Financial Intermediaries under recently introduced Targeted Longer-term Refinancing Operations i.e. TLTRO. Liquidity availed under the scheme by Banks has to be deployed in investment grade corporate bonds, commercial paper, and non-convertible debentures over and above the outstanding level of their investments in these bonds as on March 27, 2020. Banks shall be required to acquire up to fifty per cent of their incremental holdings of eligible instruments from primary market issuances and the remaining fifty per cent from the secondary market, including from mutual funds and non-banking finance companies. Investments made by banks under this facility will be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. Exposures under this facility will also not be reckoned under the large exposure framework. Banks will be able to support NBFCs/ MFIs/ HFCs etc. under this window and we donot foresee liquidity squeeze for these Financial Intermediaries.
        14. Will all these measures of RBI be treated as “restructuring”? What about the provisions applicable?
          The measures stipulated by RBI under the March 27, 2020 circular on COVID 19 Regulatory Package will not be treated as “Restructuring” and hence will not result in asset classification downgrade. Accordingly, the enhanced provisions for Restructured Accounts will not apply.
        15. What about instalments/EMIs being recovered through SI/ECS/NACH? What will be the procedure for refund of the instalment/EMIs, if demanded by the Borrower?
          Please get in touch with your bank for the revised mandate








        https://economictimes.indiatimes.com...w/74913557.cms
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        • #14

          #14

          Re : RBI's 3-month EMI, Loan moratorium: Things to note

          RBI 3 Months Moratorium on Loan EMI




          Advantages Of RBI Moratorium On Loans


          Instead of the ongoing COVID-19 pandemic that has gripped the whole country, forcing it to go into a complete lockdown, one can only but reflect on the financial impact this will have on his/her household not limited to paying back loans, amidst all the tensions that have arisen due to this absolute halt. However, the Reserve Bank of India has asked banks to do their part in making this difficult situation a bit more manageable. As a result of the culmination of the recent meeting, RBI has instructed banks and credit card companies to relax their loan recoveries for three months, initiating a moratorium, a term we come across ever so rarely, and hence showing its interests towards the country’s economy that has been affected due to this pandemic.


          What is RBI’s moratorium on EMIs?


          Because the entire country is on lockdown in an attempt to eradicate the COVID-19 pandemic that has had a significant impact on the country’s economy, it is safe to assume that every individual, on a personal level, has suffered financially. To relieve borrowers from the unfortunate grips of defaulted payments that will eventually lead to bad credit scores, and not to mention the corpus of debt that will ultimately accumulate, the RBI has rolled out a moratorium and has asked banks to halt recovery processes for three months. The moratorium, according to the dictionary, is a legal authorization to debtors to postpone payments. What this means is that borrowers now need not worry about their EMIs (Equated Monthly Instalment) from March 31 to June 1.


          Understanding the Moratorium


          As is the misconception that this ruling allows borrowers to knock three months off of their loan term, hence, in effect, deducting this amount accumulated from their total payable, let us break the myth. Although it does allow for a scope of not paying for the next three months, it is simply a deferment of payments and not a deduction of the term. What this means is that the loan has been paused. Once you start paying your EMIs after the three-month moratorium, the accrued and accumulated interest is also to be factored into your payments.

          Some salient features of this ruling are as follows:
          1. The moratorium has been implemented for three months viz. March-April, April-May, May-June.
          2. The ruling shall act as a deferment, and the term shall continue to post the moratorium mandate.
          3. No interest will be charged from borrowers in this duration. (it, however, will be accrued and is payable at the culmination of the moratorium)
          4. Credit scores will not be affected during the period the moratorium is in effect.
          However, it is of utmost importance that one understands that this is not a mandate and is up to your bank to decide if you qualify for this relaxation, and, so to speak if it is necessary. But what kind of loans does this moratorium relate to?


          In line with the RBI circular, the moratorium allows for the following loans to qualify for the relaxation.
          • Vehicle loans.
          • Personal loans
          • Home loans
          • Agricultural loans
          • Crop loans
          • Miscellaneous loans on personal uses like consumer durables loans and education loans.
          The circular also specifies that this is applicable to credit card payments as well. As we now know that interest will not be charged either, this sums up the moratorium in two or fewer sentences as applicable to both the interest and the principle payable amount, in effect applicable to your entire EMI amount.

          Should this relaxation be utilized?


          There are two perspectives of looking at this. Here are some points that might help you decide if this is the only way out for you.
          1. Because this moratorium applies not only to banks but also to NBFCs (Non-Banking Financial Company), this feature will be the best option for you if you fall prey to one or more of the following situations.
          2. If you are unemployed and have financial obligations that cannot be ignored, this is a vast yes please scenario.
          3. If you see signs of layoffs in the future, this moratorium will help you save up some amount until you are able to find another source of income.
          However, it is essential to understand that the interest is accrued and accumulated, which is payable after the moratorium ceases to exist, which will add to your financial burdens. Hence, if you are in a position to pay your EMIs and Credit card bills, do it and do not wait for your bank to offer you the moratorium option. This benefit is only to be used in extreme cases where you risk liquidity, especially if you are used to steady cash flow in the form of salaries.

          In closing, we suggest you stick to your payment schedules and continue paying your EMIs and not risk the accruement of an aggregate interest at the end of this moratorium, hence affecting your financial planning. Take this offer up ONLY, and if ONLY, you are on the verge of liquidity and are in a terrible situation.


          RBI 3 Months Moratorium on Loan EMI FAQs:

          1. What is the moratorium, and can I avail it?

          The RBI moratorium on EMIs is a facility the RBI has offered as a solution to the ongoing economic crisis as an onset of the COVID-19 forced lockdown. The moratorium offers an option where borrowers can defer their payments for three months. Yes, one can avail of it. However, it is up to your bank. The RBI has offered this as a solution alone. But it is up to the decision of banks, NBFCs, small loan banks, etc. if this is necessary after estimating their goals.

          2. Will the term be extended if I choose to opt for the moratorium?

          Unfortunately, no. The interest generated during this period, along with the accumulated pending principal payments, will be recovered as lump-sum amounts.

          3. Do I have to pay for these three months of missed payments later?

          Yes. At the culmination of this moratorium, the interest is accrued, and the principal amount accumulated, which is to be repaid as a one-time payment. Although, this is yet to be officially rolled out as a mandated rule.

          4. Will I be charged interest during this period?

          Yes. Although you won’t be charged during the period, the accrued interest generated for this duration is to be paid along with your accumulated principal amount in full once the moratorium loses effect.

          5. Will this affect my credit score?

          NO. The deferent advises against a mark-down in CIBIL scores.

          6. Does the moratorium also apply to credit cards?

          Yes. Although it is yet to be clarified, the deferment also includes credit card repayments without any effect on your credit scores.

          7. What will be the rate of interest charged for me during this period?

          There will be no change in the rate of interest your lender has been charging you.














          https://www.lendingkart.com/blog/rbi...m-on-loan-emi/
          Last edited April 3 2020, 07:54 AM.
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          • #15

            #15

            Re : RBI's 3-month EMI, Loan moratorium: Things to note

            Banks have very promptly reduced interest rates on fixed deposits, however, loans continue to be recovered at the pre-covid rates of over 8%. The EMI deferment is a mere eyewash

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            • #16

              #16

              Re : RBI's 3-month EMI, Loan moratorium: Things to note

              5 things to know about 3-month EMI moratorium offer by RBI

              The three-month EMI moratorium offered by the Reserve Bank of India includes all term loans like home loans, personal loans, credit card dues etc.

              ET CONTRIBUTORS|
              Last Updated: Apr 13, 2020, 11.47 AM IST
              Getty Images

              This deferment will not result in negative impact on credit score for individuals or credit downgrade or default for corporates.

              1. Three months moratorium on loans by RBI means that borrowers can skip their monthly instalments which are due from 1 March 2020 to 31 May 2020.

              2. It includes all loans including home loan, personal loans, education loan, auto loan, working capital loan, credit card dues etc.

              3. Interest is not waived off and will continue to accrue on the outstanding amount.

              4. Borrower will have to pay additional interest for three months by either increasing the amount per instalment or number of instalments.

              5. This deferment will not result in negative impact on credit score for individuals or credit downgrade or default for corporates.











              https://economictimes.indiatimes.com...w/75094300.cms
              Last edited April 14 2020, 07:15 AM.
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              • #17

                #17

                Re : RBI's 3-month EMI, Loan moratorium: Things to note

                RBI circular on loan moratorium challenged in Supreme Court

                Updated : April 13, 2020 06:40 AM IST

                The PIL seeks the Supreme Court’s directions to ensure that customers are not charged accrued interest for the moratorium period.

                The PIL further says that during such difficult times, the state must not look to enrich itself.



                RITU SINGH

                *_ritusingh

                A public interest litigation (PIL) was filed in the Supreme Court on Saturday against the Reserve Bank of India’s March 27 circular on the three-month moratorium permitted for loan repayments due to the economic impact of the COVID-19 pandemic, terming it an “eyewash”.

                The PIL was filed by activist and advocate Amit Sahni, and it seeks the Supreme Court’s directions to ensure that customers are not charged accrued interest for the moratorium period.

                The Reserve Bank of India, on March 27, had permitted all lending institutions to allow a three-month moratorium on repayments of all kinds of installments, including for credit cards, for all term loans outstanding between March 1, 2020 and May 31, 2020. A similar three-month deferment for all working capital loans to help borrowers tide over the coronavirus related economic hardships was also permitted.

                The catch in this relief was that interest would continue to accrue during the three-month moratorium, which would additionally have to be borne by a customer if he/she chose to avail of the benefit.

                The petition filed in the top court seeks that no interest be charged during the moratorium as citizens were facing “extreme hardship, whereby business and work have come to a halt and the entire market has crashed,” and that there was no sense in paying additional interest along with the regular EMIs.

                The PIL further says that during such difficult times, the state must not look to enrich itself, and has also sought SC directions to both the RBI and the government to consider even extending the moratorium period for loan repayment for longer. ​











                https://www.cnbctv18.com/legal/rbi-c...rt-5671511.htm
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                • GlobeSon
                  GlobeSon commented
                  Editing a comment
                  1.Banks have been prompt in reducing deposit rates and savings account interest rates; then why not pass on some of this benefit to loan account holders?
                  2.Having said that, the bank still has to continue paying staff salaries and office rentals. So the cost of doing business hasn't come down. How can interest on EMIs be waived?
              • #18

                #18

                Re : RBI's 3-month EMI, Loan moratorium: Things to note

                RBI has extended the moratorium on home loan EMIs till August, also cutting down the repo rate to 4%
                The RBI recently extended the moratorium on all term loans, including home loans, till August 31. It also announced a 40-basis point reduction in the repo rate. The decision comes in view of the contraction in the economic growth owing to the Coronavirus pandemic. The recent cut in the repo rate to 4% comes two months after the banking regulator had cut its key lending rate by 75 basis points, to bring it down to 4.40%.
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                • #19

                  #19

                  Re : RBI's 3-month EMI, Loan moratorium: Things to note

                  However, the Confederation of Real Estate Developers’ Associations of India (CREDAI) has written to the RBI governor, saying that banks have not been passing on the rate cut benefit to the borrowers and developers. They claim that even though the RBI has reduced the repo rates by 2.50% since January 2019, banks have passes a maximum reduction between 0.7% and 1.3%, largely from August 2019 till date. Surprisingly, in some cases, there has been no repo rate reduction at all.
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                  • #20

                    #20

                    Re : RBI's 3-month EMI, Loan moratorium: Things to note

                    It is new idea and offer By RBI in which during term is not oblige to payment to bank and other mean revise and extension time for payment of EMI of loan.but I think here is some hidden that we can see any calculation till date of finish

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