Though Government of India has given relaxation on opening shops, Government offices, private offices, etc but still people have not been able to improve their financial status. India receives high turnover per day before the spread of Corona virus disease all over. With the lock down situation, the Government suffered heavy financial crisis. However, safety is first so keeping aside all monetary losses, RBI extends EMI moratorium for another three months. In simple words, those who have borrowed financial help from bank in the form of loan now need not to worry because Reserve Bank of India gave them relaxation for another three months. This step by Reserve Bank of India (RBI) Governor Shaktikanta Das is commendable and appreciable.
All about EMI Moratorium
The term ‘Moratorium’ means payment of EMIs and not on interest. As a relief to people and industry suffering from ongoing lockdown, the government has decided to give borrowers a grace period of another three months for payment of EMIs. Suppose, your loan is going, then you will get relieve from paying EMI for the months of March, April and May. It is important to understand that it is only a grace period, not a waiver of the loan.
Truth about Loan moratorium extension
This is highly initiative step in reference to installments and interest/EMIs on Term Loans between 1stMarch 2020 to 31st May 2020. The present pandemic scenario compelled RBI to seek the decision of extension of 90 days/3 months. The loan EMI payment will resume after the expiry of 3 months of moratorium time period. After the meeting commenced by RBI Governor Shaktikanta Das with public and private sector banks, the issue of loan moratorium was also analyzed.
Amount of interest to be charged on moratorium
RBI’s extension of EMI moratorium for next three months will carry forward the unpaid amount to the next billing cycle along with 2 to 4% interest levied on it. Also, the issuer will not block your credit card if the bill is unpaid during these three months. Since lockdown began due to corona virus, Reserve Bank of India cut the repo rate by 40 basis points to 4% and the loan moratorium now extended till 31st August.
Results of Press conference by RBI Governor
As social distancing and shortage of labor affecting human lives economically, the recovery activity will start in Q3 and will gain a momentum in Q4 as soon as the supply lines restored to normalcy and demand gradually revives. When everything will get to normalcy, lenders will be able to pay the EMI smoothly.
COVID-19 brought Inflation Time
Undoubtedly, COVID-19 brought uncertainty in the lives of people. Hopefully, the supply lines get restored with lockdown relaxation; there are chances of inflation in business. Food inflation may also affect people to a high extent. To control the unexpected inflation, the rate of rep will decrease. The growing financial stress leads to bring financial stability. RBI will be alert and vigilant all the time and will take the measures needed to be taken during COVID -19 pandemic.
EMI moratorium Extension Likely to bring Economic Activity
The collapse of demand in electricity, less consumption of petroleum products, etc brought fall in private consumption. With the increase in EMI moratorium, people have become relaxed and looking forward to get back to work. The economic activity by each and every citizen of India will lead to bring country back to normalcy.
In the Nutshell
RBI, the biggest bank of India extends the moratorium period by three months is actually a sigh of relief to industry and household borrowers. People may get time to think about how they will be able to make the payment. So, borrowers should now think of solution as country is also in challenging phase where together we can overcome the major impact of COVID-19 on the Indian economy.
