RBI’s Moratorium Policy on Loan Repayment in wake of COVID-19
The ongoing COVID-19 crisis has not only created a worldwide health emergency but has also stressed the financial situation of individuals and businesses.
The Government has announced various relief packages, the Reserve Bank of India has also announced relief measures for customers who are repaying loans to tide over their financial difficulty in servicing the debts.
Accordingly, vide their circular RBI/2019-20/186 & Statement on Developmental and Regulatory Policies dated March 27th, 2020, RBI has permitted banks and financial institutions to provide a moratorium up to 3 months for all payments (both principal & interest) due between March 1st and May 30th 2020.
The accumulated interest along with the principal will be amortized over the period of the loan. This will result in an increase in the existing EMI or an extension of the residual term of the loan to amortize the accumulated interest along with the principal.