What All You Can Do Post RBI Loan Moratorium Period
Did you opt for RBI Loan Moratorium to manage your expenses during pandemic? If yes, the 6-month long moratorium period that gave you some relief has ended on August 31, 2020. You have to pay the EMIs now and keep a track of your daily expenses at the same time. This blog will help you learn things you can do post moratorium period for a smooth and stress-free repayment of your loan.
While the nation was in lock-down due to the COVID-19 pandemic, Reserve Bank of India (RBI) announced a 3-month loan moratorium on March 27, 2020 as the businesses were shutting down, companies were laying-off and people were facing heavy financial losses. RBI permitted all the banks and other financial institutions to provide moratorium on all the retail loans to ease the burden of those loan borrowers who may face liquidity issues in paying their EMIs during the pandemic.
However, when the RBI did not see the situation improving, it extended the moratorium for 3 more months and finally ended the six- month long run on August 31, 2020. If you are someone who had opted for loan moratorium, you must learn these important facts mentioned below to manage post loan moratorium period efficiently.
Resume repayments: If you have left behind the hard times and have a regular cash flow, the first thing you should do is to start repaying the EMIs on or before the due date. If you have already set up automated instructions, make sure that you have enough balance in your bank account to avoid late payment charges in future.
Consider loan restructuring: If your business is still shut down or you are not able to find another job, you can restructure your loan (both secured and unsecured). In loan moratorium, you were excused from paying your EMIs from 6 months, however, if you opt for loan restructuring, there are various options available that can be discussed with your lender if you are unable to pay the EMIs and meet certain conditions of your bank.
Depending upon the financial situation of a borrower, the banks can offer a customized restructure plan to you and you can choose from the following available options:
- Rescheduling loan repayments
- Extending tenure
- Reworking on the interest rate
- Converting the accrued interest rate that occurred during the moratorium as a separate term loan
- Extending moratorium up to 2 years
Consider repaying your accumulated interest: While you exempted yourself from paying your loan EMIs for 6 months by opting for the moratorium, you may have completely forgotten that the principal on your loan amount has piled up. Therefore, if you feel that your financial condition has improved, try to pay the full or at least some amount of the accumulated interest so that you can either continue paying regular EMIs or can reduce some burden off your shoulders.
Know your loan tenure and consider extension (if required): When you opted for the moratorium, your loan tenure was also extended. For example, if you had a personal loan for a tenure of 24 months and you opted for moratorium for a time period of 3 months, your actual loan tenure was extended to 27 months. Therefore, you must cross-check the revised tenure with the lender to avoid any confusion in future.
Also, if you are still not in the situation to pay the accumulated interest, you can talk to your lender and can continue to pay your scheduled EMIs along with an extension of the loan tenure. In such a situation, the accrued interest for the moratorium period will be added to the principal and loan’s tenure would be extended according to the number of months which you opted for the moratorium.
It is crucial for you to understand that you should consider restructuring your loan only when your financial condition is badly affected as loan restructuring increases the burden of repaying a heavy interest rate. Also, if you restructure your loan, it will get reported to the credit bureaus but it won’t affect your credit score much. However, your credit score will be badly impacted if you fail to repay the EMIs post moratorium period. Therefore, consider all the factors and take a wise decision for a financially secure future.