The Reserve Bank of India recently announced a three-month extension of the moratorium period on all term loans, EMIs and other loan repayment installments outstanding till August 31, 2020. The gradual recommencement of the economy post lockdown has left many people clueless about their forthcoming expenses. This moratorium extension is a much-needed step to lift the financial burden off borrowers and provide some temporary relief.<\/p>\n\n\n\n
The disruption in cash flow, in some cases complete loss of income, has left many businesses and professionals with huge debts. This loan moratorium policy implemented by banks exempts the payment of EMIs, mortgages and credit card dues, allowing a breathing room of at least 90 days to manage finances.<\/p>\n\n\n\n
What is a Moratorium Period?<\/strong> A moratorium period\nis common for education and home loan repayments, however, it can now be\napplicable in all loan installments and EMIs, including credit card dues. <\/p>\n\n\n\n Moratorium Period for Real Estate buyers<\/strong>
Simply put, it is a period during which a borrower is not obligated to pay EMIs or loan installments that may be pending. The moratorium period delays the payment of installments to the bank for a stipulated period of time. It is better defined as an EMI-holiday. However, the interest continues to accrue on the outstanding amount of the loan during the moratorium, which shall be payable later.<\/p>\n\n\n\n
In the real estate sector, banks set a fixed moratorium period, a lot like a grace period after the loan has been disbursed, that allows the borrower to pay off his debt (including the interest) at a later stage. Banks allow a moratorium period in special cases, such as when the construction of a property gets delayed, the buyer can choose to pay his monthly fixed mortgage after this grace period that has been pre-decided based on an agreement between the buyer, bank and builder. <\/p>\n\n\n\n