The Reserve Bank of India on Friday allowed banks and NBFCs to provide three-month moratorium to borrowers on term loan EMI payment in order to soften the blow of Covid-19 pandemic on the middle class and corporate borrowers. A moratorium is a legal authorization to borrowers to postpone payment.
In case borrowers avail the moratorium from their respective bank, this will not be treated as a default, hence there will not be a negative impact on their credit score. RBI “permitted all banks, NBFCs and other FIs to allow a 3-month moratorium on payments of term loan instalments outstanding as on March 1, 2020, deferment on which will not impact the credit history of the borrower,” Adhil Shetty, CEO, BankBazaar.com said.
This move will benefit all the borrowers of home loan, car loan and personal loan as these are considered as term loans. However, this forbearance does not mean that your EMI due for the month of April, May, June will not be deducted from your bank account. In order to avail, the benefit of the moratorium borrowers have to approach their banks following which bank will allow them to skip payment of EMI for up to three months.