Everything you need to know about the RBI’s Moratorium

By admin | May 13, 2020

The country-wide lockdown amidst the coronavirus crisis has crippled the economy and led to thousands of people losing their jobs and facing pay cuts. To help people tide over this economic fallout, the Reserve Bank of India (RBI) announced an option of up to 3 months’ moratorium to borrowers for loans outstanding as of March 1, 2020.


What is a Moratorium?

A moratorium can be thought of as a payment holiday, where the borrower gets temporary relief of the obligation to make his or her loan repayments. As per RBI’s announcement, borrowers can get a repayment holiday from loan EMIs for 3 months’ from March 1 to May 31, 2020.


What does it mean for you?

If you’re facing a job loss or pay cut, the moratorium period will give you relief from the pressure of loan repayments, and give you time to find a firmer financial footing.  If you are finding it difficult to manage the day to day expenses due to the lockdown, a moratorium will allow you to focus on your daily expenditure instead of paying your EMIs.  If you avail the moratorium, non-payment of interest or instalments during these 3 months will not be considered as arrears or default, and will not affect your CIBIL score.


A moratorium, however, should be considered as a last resort. Although the moratorium is offered to give relief to the borrower, it also comes with a cost. While borrowers are not required to pay EMIs or interest until the end of the moratorium period, the interest will continue to accrue on their loan amount. 


In other words, if you avail a moratorium you will end up paying extra interest on your loan. The following video will help you better understand the effects of the moratorium.

At NIRA, we are giving our customers the option to opt for a 3-month moratorium. But we urge them to continue to pay their EMIs on time to avoid any accrued interest and only opt for a moratorium under dire circumstances.



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