It is a deferment not a waiver
The EMI moratorium scheme is a deferment or postponement of EMI liabilities. It is not a waiver. Any EMI or loan instalment falling due between March 01, 2020 and May 31, 2020 can be deferred for a period of 3 months. An EMI due on April 10th can be deferred to July 10th and EMI of May 10th can be postponed to August 10th. The idea is to give temporary relief as the lockdown could result in income disruptions.
Applies to loan payments between March and May 2020
EMI moratorium scheme is applicable to any loan instalment that falls due between March 01st and May 31st. It does not matter whether it is a post-paid EMI or a prepaid EMI. Only the EMI due date will be considered in this case. Again, this EMI moratorium is not automatic and the borrower needs to apply to the bank for deferment.
EMI moratorium applies to loans by banks / NBFCs / HFCs / MFIs
The EMI moratorium is not restricted to only banks but to all eligible financial institutions. Even if you have a loan from a housing finance company like Indiabulls Housing or an NBFC like Bajaj Finance, you can still opt for the EMI moratorium scheme. The scheme will also apply to cooperative banks and regional rural banks too.
Businesses and individuals, both can avail the EMI moratorium
Corporate borrowers can avail the EMI deferment scheme on working capital loans and also on term loans. However, debentures and bonds (even if privately placed with institutions) are not eligible for this scheme. In case of individual loans, all types of loans like home loans, personal loans, car loans and credit cards are eligible.
Your bank’s email is not an offer but an invitation to offer
There is a legal issue to understand here. The email sent by your bank about the EMI moratorium is not an offer. So, don’t assume that if you accept, it becomes binding on the bank. The email is just an invitation to make an offer. If you don’t opt for the deferment scheme then your normal EMIs will continue.
Interest will accrue; penalties are exempted
There will be no penalty charged by the bank for the deferment. However, for the 3 month period, the interest on the outstanding loan will continue to accrue. The outstanding interest for the 3 months can be either paid when the normal EMI starts or it can be paid across 3 months.
EMI Moratorium will not be applicable for non-standard accounts
That brings to a question; who is eligible for the moratorium? Typically, any standard account is eligible to avail this EMI deferment scheme. However, if you have been consistently defaulting in the past or if your account has been classified as a sub-standard account, the bank may deny you the moratorium scheme.
EMI moratorium will be credit rating neutral
One question that borrowers ask is whether this deferment of EMIs will impact the credit rating of corporates or the credit standing (CIBIL score) of individuals. The RBI has made it clear that all such EMI deferments will be credit standing neutral. That means, it will not have any negative impact on your credit score.
Bullet payments and credit card dues will also qualify for deferral
Some borrowers are confused as to whether the interest component or principal payment will be eligible. Here again the RBI has clarified that the deferment will apply to EMIs, instalments, interest portion, principal portion, bullet payments, credit card dues, etc. Almost any individual loan can be eligible if the basic conditions are satisfied.
If EMI for March is debited, bank will give refund
One concern among borrowers is that the scheme is effective from March 01st to May 31st and the March EMI would already be debited to your account. In this case you can ask your bank for a refund of the March EMI. This is a policy decision and could differ from bank to bank. However, banks like HDFC Bank and SBI have explicitly stated that they would be willing to credit March EMIs to customer accounts.
At the end of the day, the decision lies with you. It is not a waiver or a benefit, just a deferment. If you can afford to pay your EMIs during this period, you may as well do it.