From UPSC perspective, the following things are important :
Prelims level : Moratorium Option
Mains level : Not Much
The RBI has permitted banks to allow moratorium of three months on payment of instalments in respect of all loans including home, car and personal loan among others.
What exactly this moratorium means?
- Both the loan principal and interest are covered under the moratorium. This applies to all loans outstanding on March 1.
- We must note that this is a postponement, not a waiver.
- RBI’s wordings clearly say that the tenor for term loans across the board may be shifted by three months. This essentially means the loan will end 3 months later than was originally slated.
- Essentially, it means that payees won’t be treated as a defaulter even if you don’t pay your EMI till May 2020, and your CIBIL score won’t be affected.
- This moratorium period will not come free, and since the interest will continue to accrue on the outstanding portion of the loan during the moratorium period, it may increase the customers’ burden significantly.
The installments include:
- principal and/or interest components;
- bullet repayments;
- Equated Monthly installments;
- credit card dues