Please Note: On May 22, the Reserve Bank of India (RBI) announced an extension of the moratorium on loan EMIs by three months, i.e., August 31, 2020, in a press conference, accordingly I have updated the petition from 3 months to 6 months. The tenure now being March 1st to August 31st, 2020.

The RBI Governor Shaktikanta Das announced a 3-month moratorium on EMI effective from March 1 to May 31st, 2020 which is a relief in some way. Further, an extension of 3 months with no change in policy was also announced on May 22, 2020. But when we look closer, it seems to be a different story. 

Since I have a home loan, a personal loan and a credit card, I checked my terms and conditions.  I also read articles, bank guidelines and spoke to experts and here is what I found.

Yes, the EMI payment shall be delayed during this period, but the Interest meter will keep on running. What it means is that every month there would be interest charged on the outstanding amount.  And this amount will be added to the principal amount and adjusted in our future payments. 

This means an increase in the number of  EMI installments ranging from  2 EMIs to 15 EMIs or even more!!!!

According to SBI STOP EMI guideline, the Impact of Deferment is as follows -*considering only 3 months of deferment, for 6 months the amount will further increase

Impact in case of Auto Loan – For a loan of Rs.6 Lacs with a remaining maturity of 54 months the additional interest payable would be Rs.19,000 approx. equal to an additional 1.5 EMIs.

Impact in case of Home Loan – For a loan of Rs.30 Lacs with a remaining maturity of 15 years, the net additional interest would be approx. 2.34 Lacs equal to 8 EMIs.

Similarly, other banks too have charges like this and so in a nutshell, people who opt for a moratorium due to financial crisis will have to pay extra for choosing the moratorium option provided by the RBI. Thus, forcing the borrower to Not opt for the moratorium and pay by hook or by crook. 

Like me, there are many people who are unsure of how they shall pay their EMIs on time which were dependent on the earning that they had through their jobs and business. Taking a moratorium will only increase their expenditure. 

Hence, I urge you to sign my petition asking Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das to Waive off the Interest for the 6 month Moratorium period on EMI and extend the same if the situations get worse.

I also urge Prime Minister Narendra Modi to intervene and provide relief to supporters of the petition as we all are going through tough times.

#ByajNaLo #HaltEMIInterest #Covid19 #PMCares

Image credit: CNBC TV18. The calculation of EMI is based on 50,000 per month.

Related Article: https://www.businesstoday.in/current/economy-politics/coronavirus-relief-finance-ministry-urges-rbi-pause-emi-loan-repayments/story/399332.html