If you are unable to fill EMI due to Corona curfew, then take Moratorium for two years, understand what is the new scheme of RBI


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Most states in the country are under lockdown due to the second wave of Corona. Even where the number of new cases is decreasing, the lockdown will not be lifted in May. Some states have already prepared for the lockdown by June. It is clear that the markets are still going to remain closed and for people whose income has affected this lockdown, it will be difficult to repay the loan installments (EMI).

In such a situation, many organizations ranging from transporters to small traders have demanded loan moratorium. That is, asking for exemption from repaying EMI on the loan for a few months. A petition has also been filed in the Supreme Court. Taking lessons from the circumstances of last year, the Reserve Bank has decided to help those, who are really in trouble. If you are one of those people whose income has affected the lockdown that is underway to control the second wave of Corona, then the RBI scheme can prove to be a lifeline for you and your business.

What is an alone moratorium? What is the benefit of this?

The central government imposed a lockdown across the country in March last year to control the corona. All economic activity was brought to a standstill. Then the government gave a loan moratorium. From March to August 2020, loans were exempted from repaying EMI.

He got the benefit of this scheme, whose income was completely stopped. If a borrower does not repay the EMI at a certain time, then not only the interest charged on it increases but also the penalty. Credit history is poor, which makes it difficult to borrow from banks in the future. The Moratorium allows such borrowers not to make reparations and restructuring their loans for a stipulated period while maintaining the credit history of such borrowers.

Last year, the interest on interest was also exempted by the intervention of the Supreme Court. Those who paid the EMI received a cashback of the likely interest charged. On 6 August 2020, the Reserve Bank released Resolution Framework 1.0 for banks. Those who were really affected due to corona were given leeway to extend their loan repayment period by two years. The application was to be made by December 31, 2020.

What is the new RBI scheme?

The Reserve Bank announced the Restructuring 2.0 plan on 6 May last week. 2.0 because last year, the RBI and the government gave a 6-month loan moratorium and after that, the Restructuring 1.0 plan was announced. In this, banks were allowed to extend the loan period by two years. Restructuring 2.0 is an extension of the old scheme.

The new scheme provides relief to individual borrowers, small businesses, and MSMEs up to Rs 25 crore. The only condition is that the loan account should be standard as of 31 March 2021. That is, there should not be any kind of default in it. Under this plan, the borrower will have to contact their bank and they will be able to get a moratorium of up to two years. The last date to apply for this has been set as 30 September 2021.

what does this mean?

If you are unable to repay the EMI of your loan (up to Rs 25 crore), then you can contact your bank by 31 September 2021. Talk about the loan restructuring option. The bank can restructure your loan keeping in mind your remaining loan amount, your repayment track record, income, etc. This includes extending the EMI holiday or loan repayment period up to a maximum of two years. The period to apply for the previous Moratorium ended in December 2020. But this year once again the lockdown started, then many people are facing difficulty in paying EMI. The new Moratorium policy is a relief for such people and they can take advantage of it. Those who took advantage of restructuring last year can also extend their loan repayment period by two years under the new moratorium.

But, before applying for loan restructuring, keep in mind that

If you can repay your EMI even without restructuring, do not think of increasing the repayment period or moratorium at all.
The bank will decide to extend the EMI holiday to the repayment period. The bank will decide the terms of the restructuring plan. Only when he considers you worthy, will you approve the restructuring plan.

Choose the restructuring plan as the ultimate weapon. This is not permanent relief. Applying to increase any moratorium or repayment period will prove to be costly for you as it will pay you more interest.

If you are taking a restructuring plan, then find out how much interest you will have to pay extra. With that in mind, you should plan to pay it as soon as possible. With this, you will not have to pay more interest to the banks.

If you have done home loan restructuring, how much interest will have to be paid?

If you opt for restructuring, your repayment period will increase by two years. That is, if there is a loan of 20 years, then it will have to be repaid for 22 years. If the interest rate remains at 8%, then you will have to pay an additional interest of Rs 3 lakh on the arrears of Rs 25 lakh and Rs 6 lakh on the arrears of Rs 50 lakh. Depending on the interest rate and the outstanding balance, the additional interest charged to your account may be more or less. You also have to see what the bank is offering you during restructuring. This offer can vary depending on the repayment history, credit score, and outstanding balance.

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