The Reserve Bank of India (RBI) cut the loan interest rate on March 27 in view of crisis measures to shield the economy from the spread of the coronavirus. All financial institutions are permitted to allow three months of the moratorium on payment of instalments of all term loans outstanding on March 1, 2020. The loan payments must pertain to the period between March 1, 2020, and May 30, 2020. RBI also clarified that banks can allow a three-month moratorium on repayment of credit card dues too.
The choice will be spread to all regional banks, national banks, rural banks, co-operative banks, NBFCs including Housing Finance Companies, however, an official choice on giving the advantage to clients will rest with the financial institutions which they can pass after a board approval as a policy.
During the moratorium time frame, a borrower isn’t required to make any repayment. Typically, the repayment starts after the loan is disbursed and the instalments must be made every month. However, the RBI has made a one-time special case taking into account the financial trouble emerging out of the worldwide pandemic coronavirus and the monetary destruction unleashed by the lockdown forced to control its spread.
The RBI said the moratorium will not have any adverse impact on the credit history of the borrowers.