CA Nikesh Sheth Nikesh Sheth, Independent professional
1 year ago
*EMI deferral: Is it automatic, are credit card bills suspended, what for businesses, and other questions on RBI moratorium answered* *Q: My EMI is due soon. Will the payment not be deducted from my account?* A: The RBI has only allowed banks to allow a moratorium. Individual banks will have to allow suspension of EMIs. The borrower will have to request the bank and show that his or her income has been impacted by the coronavirus disruption. This means that unless you have specific approval from your bank, your EMIs will still be deducted from your account. *Q. Is this a waiver of EMIs or a deferment of EMIs?* This is not a waiver, but a deferment. You will have to pay the EMIs at a later as decided by the bank. The RBI has told banks to have board approved policies in place on moratorium/deferment. *Q. Which banks can offer this deferment to their customers?* All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) included *Q: Does the moratorium cover both principal and interest?* A: Yes. It does. If announced by your bank, you can forego payment of your entire EMI, including payment and interest. *Q. What kind of loans does the moratorium cover?* The RBI policy statement explicitly mentions term loans, which includes home loans, personal loans, education loans, auto and any loans which have a fixed tenure. This also include consumer durable loans, such as EMIs on mobiles, fridge, TV etc *Q: Does the moratorium cover credit card payments?* A: Since credit cards are defined as revolving credit and not term loans, they are not covered under the moratorium. *Q: I have taken a business loan. Can I not pay my EMI?* A: The moratorium has been allowed on retail loans. *Q: What has the RBI announced for businesses?* A: The RBI has allowed deferment for interest payments for all working capital loans taken by businesses. The accumulated interest for the period will be paid after the expiry of the deferment period. Moratorium/deferment will not be treated as change in terms and conditions of loan agreements and will not result in asset classification downgrade.