EMI Moratorium: What is it? What does it do?


It’s no news that the outbreak of COVID-19 has disrupted the financial condition of the countries. It has affected businesses and companies in ways that it is becoming increasingly difficult to manage the situation. Keeping the current situation in mind, Reserve Bank of India has declared a three-month moratorium on credit card dues and loans for lenders. This includes NFBCs, banks and other financial institutions.

In this post, we will discuss what EMI moratorium is and how it helps or what it does?

What exactly EMI Moratorium means?

By EMI Moratorium, we mean a legally sanctioned delay of repayment of loans. However, you should not mistake it as a waiver.

A moratorium is applicable to credit card dues and various types of loans such as home loans, business loans, etc. Let’s say, you have received a two months moratorium. This means you can delay the repayment by two months. But this doesn’t allow you to skip the amount due. After the two months breather, you will have to clear off the accumulated amount with the required interest.

Recently, the RBI has announced a three months breather, from March to May due to the current situation of the country.

How EMI Moratorium affects the interest rate?

If you opt for the EMI moratorium, there could be an increase in the interest rate that you have to pay after the delayed period. There are no hidden charges involved. But the interest rate or EMI will go up for every month.

For those who can repay their installments can carry on. It’s not mandatory for everyone to accept the moratorium.

Does EMI Moratorium affect credit rating?

Many of you have this question in mind, does the Moratorium affect our credit rating. Well, it doesn’t affect your credit score or rating. It applies to repayment of loans and credit card dues.

How to get EMI Moratorium?

Many of the banks are providing an automatic opt-in feature that is conveyed through SMS or email. To get the moratorium, you can simply click on these communications and it will activate the moratorium for you.

By clicking on the communications, you are letting the bank know that you are opting for the moratorium. Well, now you know how do I get this EMI moratorium.

Choosing this option will give you the chance to delay your loan repayment for the specified period. However, you should be prepared to pay a higher rate of interest after the specified time which can be risky for many of the borrowers.

EMI Moratorium is not a waiver. It can be considered a temporary relief, but only if you are ready to pay more later on. If you can, then you should clear your installments on time.

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