The Reserve Bank of India announced a three months moratorium on EMIs of all term loans, due from 1st March to 31st May. In this global crisis where there is disruption of cash-flows, by January end- Rs.13 lakh crore of housing loan and Rs. 2 lakh crore of auto loan are outstanding including credit card dues.
The moratorium of loan instalments has been availed for those who are facing some serious cash crunch in their respective businesses. It can be considered as the deferment of loan EMIs for three months where interest is being continuously accrued on the outstanding portion of the loan. There has been a confusion with loan waiver, when a loan is waived off you do not have to pay either of the loan amount or the interest. RBI has not waived any loan and announced moratorium of loan as a relief package for all term loans including educational, agricultural, retail, and crop loans under pool purchases. But, it hardly shows any signs of relief to the borrower because they have to pay the interest for these 90 days.
All lending institutes especially scheduled commercial banks have drafted different measures on the procedure of loan EMI moratorium. Some banking and non banking financial institutes have requested their customers to submit an application to avail loan moratorium. Whereas, some banks have kept moratorium as a default option and have asked customers who do not wish to avail the benefit to write an application.
After the RBI’s move, a large number of issuers had approached the Securities and Exchange Board of India (SEBI) seeking approval for extending the maturity of the commercial paper worth INR 77,798 crore and corporate bonds worth INR 91,902 crore. But SEBI is reluctant to approve this as the payment of bonds is owed to customers and not SEBI itself.
Recently, a plea has also been filed in the apex court stating the moratorium availability as “eyewash” and it makes no sense because the interest is being continuously accrued on the principal amount making the loan costlier.
