On 27 March, the RBI announced a 3-month moratorium on loan repayments to ease the financial crunch that many are facing due to the Covid-19 pandemic. If you are confused about what the moratorium means or how it will affect your loan, here is a break-down of the basics:
The moratorium period is from 1 March 2020 to 31 May 2020. It applies to all loans, including business loans, and will effectively allow you to take a break of 3 months from paying your loan EMI.
We at Kinara Capital will extend the moratorium to all our customers, to help them get through this difficult period. However, keep in mind that an EMI holiday does not mean that your loan will not accrue interest during this period, or that you will not have to pay the EMIs for these 3 months at all. The payments will simply be delayed, which would allow you time to ease your financial crunch, before returning to making payments as usual.
Another important factor to keep in mind is that the simple interest rate calculated for the 3-month moratorium period, will be added to your outstanding loan amount, effectively increasing your EMIs.
So while opting for the moratorium might seem like a great option in the short term, it might not work out to be the best solution from a long-term perspective. Unless you are going through a severe financial crunch and need the relief, it’s not advisable to opt for it.
To help our customers understand the terms and conditions of the moratorium and whether they should opt for it, our team will be reaching out to them individually. If you have any questions about Kinara’s roll-out of the moratorium, send us an email or call (toll free number).