Charging Interest for the 3-month Moratorium period on EMI

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Do you have a bank loan like I do? Because of this Coronavirus lockdown, the RBI announced a 3-month freeze on EMIs on all loans till May 31st. But the catch is – interest will keep increasing on the outstanding amount and later added to the principal loan amount! This means we could end up paying from 2 to 15 more EMIs! At a time, when some of us don’t even know how we’ll pay our EMIs, this increasing interest is very scary! Sign my petition asking the Finance Minister and the RBI to waive off the interest on EMIs for the 3-month moratorium period and to extend this if the situation gets worse.

The RBI Governor Shaktikanta Das announced a 3-month moratorium on EMI effective from March 1 to May 31st, 2020 which is a relief in some way. But when we look closer, it seems to be a different story.

Since I have a home loan, a personal loan and a credit card, I checked my terms and conditions. I also read articles, bank guidelines and spoke to experts and here is what I found.

Yes, the EMI payment shall be delayed during this period, but the Interest meter will keep on running. What it means is that every month there would be interest charged on the outstanding amount. And this amount will be added to the principal amount and adjusted in our future payments.

This means an increase in the number of EMI installments ranging from 2 EMIs to 15 EMIs or even more!!!!

According to SBI STOP EMI guideline, the Impact of Deferment is as follows:

Impact in case of Auto Loan – For a loan of Rs.6 Lacs with a remaining maturity of 54 months the additional interest payable would be Rs.19,000 approx. equal to an additional 1.5 EMIs.

Impact in case of Home Loan – For a loan of Rs.30 Lacs with a remaining maturity of 15 years, the net additional interest would be approx. 2.34 Lacs equal to 8 EMIs.

Similarly, other banks too have charges like this and so in a nutshell, people who opt for a moratorium due to financial crisis will have to pay extra for choosing the moratorium option provided by the RBI. Thus, forcing the borrower to Not opt for the moratorium and pay by hook or by crook.

Like me, there are many people who are unsure of how they shall pay their EMIs on time which were dependent on the earning that they had through their jobs and business. Taking a moratorium will only increase their expenditure.

Hence, I urge you to sign my petition asking Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das to Waive off the Interest for the 3 month Moratorium period on EMI and extend the same if the situations get worse.

By : Meenakshi Gandotra

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