Coronavirus lockdown | Lenders ready with EMI holiday offer

The Housing Development and Finance Corporation (HDFC), the nation’s largest mortgage lender, and a few other lenders will approach customers and give them the option to waive the EMI for the next three months, according to the Reserve Bank of India announced on Friday.

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The measure will allow customers, in particular those who have opted for the electronic clearing service (ECS), to choose to defer payments for the next three months.

“We will give our customers the option to defer EMIs,” said Keki Mistry, vice president and CEO of HDFC.
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HDFC will communicate with its customers by email and SMS, informing them to exercise their choice through a link on its website. The customer will also have the option to continue with EMI.

Private sector lender Kotak Mahindra Bank has also communicated via social media that the bank is working on the issue and will inform customers via email and SMS.

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The other alternative for the borrower to defer EMI is to instruct the bank from which the EMI is debited to stop the ECS service.

A borrower who has not opted for the ECS facility can simply avoid paying the installment for three months.

On Friday, the RBI allowed all banks and financial institutions, including non-bank financial companies, to extend a three-month moratorium on installments due between March 1, 2020 and May 31, 2020 for all loans. term.

consumer loans

This relaxation also applies to consumer loans, such as auto loans, home loans, and personal loans, as well as outstanding credit cards.

This would mean that a consumer can choose not to pay the equivalent monthly installments on their loans for the next three months.

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The move is part of several measures announced by the central bank to combat the economic shock caused by a nationwide lockdown imposed due to the COVID-19 outbreak.

Lenders will not have to classify the borrower’s account as delinquent due to the relaxation, RBI said. There will also be no impact on the credit score of the borrowers.

interest to accrue

The banking regulator has clarified that interest will continue to accrue on the outstanding portion of term loans during the moratorium period.

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“Clients must understand that the moratorium is not an exemption of any kind, but simply a facility that is provided to clients to overcome their temporary liquidity problem and once the moratorium period ends, they must pay the loan with the accrued interest,” said an official at a housing finance company.

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