Even as the RBI's loan moratorium scheme may provide some relief amid coronavirus outbreak, borrowers are expected to move ahead with caution. While the proposal allows for the deferment of payment of all term loan installments, interest would continue to accrue on the outstanding portion of the term loans during the 3-month moratorium.
The country's largest public sector bank SBI has issued a notice to customers giving examples of how much interest will pile on in the period. In case of a home loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would stand at nearly. 2.34 lakh, or equal to 8 EMIs. Similarly, in case of an auto loan of Rs 6 lakh which comes with a maturity of 54 months, the additional interest payable would come out to be Rs 19,000 approximately and it is equal to an additional 1.5 EMIs.
In case the borrower doesn't require an extension, there is no action required at his end and the EMI payment will continue as usual. The loan borrowers, account holders and credit cardholders can get their EMIs rescheduled through the moratorium of 3 months on payment of all term loan installments due between March 1 and May 31 according to the RBI COVID-19 relief package. In the past few days, the RBI has announced a slew of regulatory measures to mitigate the burden of debt servicing brought about by disruptions on account of coronavirus lockdown.
In the last few weeks since the pandemic has erupted, a temporary disruption in the cash flows and loss of income, for the businesses or individuals, has been reported. The present measures may work to bring relief. Meanwhile, India is currently under a 21-day lockdown till April 14 to fight against the coronavirus outbreak.