RBI’s Moratorium Option
RBI’s Moratorium on Loan Repayment in wake of COVID-19- 2.0
The ongoing COVID-19 crisis and extension of lockdown continues to stress the financial situation of individuals and businesses alike.
While the Government has been announcing various relief packages at regular intervals to minimize the impact, the Reserve Bank of India (RBI) has also announced additional relief measures for customers who are repaying loans of any kind, to tide over their financial difficulty in servicing the debts.
Accordingly, vide their RBI/2019-20/244 & Statement on Developmental and Regulatory Policies dated May 22nd , 2020, RBI has permitted banks and financial institutions to further extend the moratorium for another 3 months for all payments (both principal and interest) due between 1stJune, 2020 and 31stAugust, 2020.
The accumulated interest during the moratorium period along with the principal will be amortized over the period of the loan. This will result in an increase in EMI of the loan. In view of the above, HDFC’s customers who have already availed the moratorium on their loan and wish to extend the same till August 31 2020, may do so by logging into their online loan account.
Customers may extend or avail the moratorium latest by June 20th, 2020 by clicking here.
Frequently Asked Questions
1. What is moratorium?
A moratorium implies that the customers may defer the payment of their monthly loan installments (Pre EMI/EMI) for a limited period as defined by HDFC. The interest, at the applicable interest rate, shall continue to accrue on the outstanding portion of the loan during the moratorium period.
For e.g. If a moratorium of 3 months is permitted by HDFC, and a customer wishes to avail of this facility, then his or her EMI for June, July and August 2020 gets deferred. From September 2020, the revised EMI is payable by the customer.
Please note that the moratorium should not be understood as a waiver and hence interest will continue to accrue on the outstanding principal during the moratorium period.
2. What is the moratorium scheme announced by RBI to address financial stress caused by COVID-19?
As per RBI’s circular dated 27th March 2020, HDFC and other lending institutions have been permitted to grant a repayment moratorium of up to three months to its customers, on EMIs/Pre EMIs due between March 1st, 2020 and May 31st, 2020. This facility is permissible for loans outstanding as on March 1, 2020. The RBI has further permitted to extend the moratorium for another 3 months vide its circular RBI/2019-20/244 & Statement on Developmental and Regulatory Policies dated May 22nd ,2020,, i.e. from 1st June 2020 to 31st August 2020.Hence, all loans that were disbursed on or before 29th February 2020 and which are standard , will be eligible for the moratorium. Interest shall continue to accrue on the outstanding principal during the moratorium period.
3. Will the moratorium be applicable on principal repayment, interest repayment or both?
The moratorium will be applicable to both principal & interest components i.e. the moratorium is applicable on loans in which customers are paying either EMIs or Pre EMIs.
The interest, at the applicable interest rate, shall continue to accrue on the outstanding portion of the loan during the moratorium period.
4. What is applicable term of the moratorium?
A moratorium of up to a maximum period of 3 months may be offered by HDFC. The lenders are permitted to grant moratorium for all installments due between June 1st and August 31st, 2020. To avail of the moratorium from June 1 2020 to August 31, 2020, customers will have to apply, even if customers had availed of the previous moratorium valid up to May 31, 2020.
5. Will the interest continue to accrue during the moratorium period?
Yes, the interest will accrue on your loan during the moratorium period. The EMI will be recalculated at the end of the moratorium period so that the Principal together with the Accrued Interest get amortized over the balance term of the loan.
6. Will I be charged penal interest during the moratorium period?
No, however the moratorium should not be understood as a waiver and hence interest will continue to accrue on the outstanding principal during the moratorium period.
7. Do I have an option to continue paying EMIs/Pre EMIs as per the schedule during the moratorium period?
Moratorium is an option provided by HDFC to its customers who are facing financial distress owing to this unprecedented situation. However customers who wish to continue with the payment of their EMIs/Pre EMIs as per their original schedule, can do so.
8. Can opting for the moratorium scheme adversely impact the credit score of the customer?
The postponement of the EMI/ Pre EMI payments during the moratorium period will not affect the customer’s credit score. During the pendency of the moratorium period non-receipt of EMIs/Pre EMIs will not be classified and reported as default to the various credit bureaus.
9. What will be my term after the moratorium?
The balance term at the end of the 3 month moratorium period would remain the same as it were before the start of the moratorium. Thus, if a loan had 136 months balance before the moratorium on 1st June 2020, it would now be the same 136 months from 1st September 2020. The total term would extend by 3 months.
10. How to opt for moratorium?
You can opt for moratorium by either visiting our website https://www.hdfc.com or go through the link that is sent to you through email and SMS. This is to enable you to close your option through the digital mode.
11. If I do not want the moratorium, what should I do?
If you do not want the moratorium, no further action is required from your side. We will continue to bank your repayment instructions.
12. At what rate will I be charged interest during the moratorium period?
The interest will be charged as per the applicable interest rate on your loan.
13. If I have multiple loans do I have to apply for each one separately?
Yes, you will have to select the moratorium option for each account separately.
14. What is the last date of applying for the moratorium?
The last date for applying for moratorium is June 20th 2020.
15. What is the procedure to extend the moratorium on my loan till 31st August 2020?
You can extend the moratorium on your loan by logging into your account on https://portal.hdfc.com/login .
16. I had not availed the moratorium facility on my loan between 1st March - 31st May 2020, can I avail the moratorium now?
Yes, you can avail the moratorium facility on your loan for a period of upto 3 months from 1st June 2020 to 31st August, 2020. The interest, at the applicable interest rate, shall continue to accrue on the outstanding portion of the loan during the moratorium period.
17. Will the moratorium be applicable to new loans disbursed between the period of 1st March to 31st May 2020?
Moratorium is applicable only for loans which were disbursed on or before 29th February, 2020. Hence, it does not apply to new loans.