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Private banks, NBFCs to continue EMIs, if not informed
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IANS | 01 Apr, 2020
Unlike the public sector banks, customers of private banks and
non-banking financial companies (NBFCs) would continue to pay EMIs on
their term- loans unless an specific instruction is issued, as per the
Covid-19 RBI package.
Several private banks and NBFCs informed
their customers on Wednesday that auto debit facility for loan
instalment won't be cancelled. If a customer wants to hold equated
monthly instalments (EMIs) for three months, they will have to specify
that by sending an e-mail to the bank/NBFCs.
"Relief package,
#ICICIBank offers its customers a choice of either paying towards their
loans/credit facilities or opting for a moratorium till May 31, 2020.
Customers are requested to visit icicibank.com to specify choice," the
private lender tweeted.
However, most public sector bank have
operationalised three-month moratorium without asking customers. Regular
EMIs will continue once the customer specifies that he's willing to
pay.
Other lenders, like HDFC Bank, Tata Capital, Edelweiss,
Bajaj Finserv, RBL Bank, Adi's Bank, IndusInd Bank, Deutsche Bank,
Rattanindia and Indiabulls, have announced specific email IDs where a
customer will have to write to indicate the repayment choice.
With
information on EMI deferment coming in April, most customers will get
the deferment benefit of just two months (April and May) unless they
have defaulted on paying the March instalment.
Banks have also posted mailers and FAQs on their sites informing customers about the scheme.
Many
customers are expected to opt out of the EMI deferment as during the
moratorium period interest will continue to accrue on the term-loan's
outstanding. The interest accrued will be added to the outstanding and
the repayment schedule for the residual tenor will be shifted across the
board by three months after the moratorium period.
But you must
take into account that under the scheme, interest on loans, though not
mandatorily payable immediately, gets postponed by three months,
continues to accrue, raising the loan cost.
To give a
perspective, suppose your loan outstanding is Rs 1,00,000 and you are
charged 12 per cent interest, then every month you are liable to pay Rs
1,000 as interest. If you opt not to service the interest every month,
you are liable to pay interest at 12 per cent and accordingly you will
pay Rs 3,030.10 at the end of the third month. Similarly, if the
interest rate is 10 per cent, you are required to pay Rs 833 a month or
Rs 2,521 after three months.
In the case of credit card dues,
there is a requirement to pay minimum amount. If not paid, it gets
reported to credit bureaus. In view of the RBI circular, the dues in the
credit card account won't get reported to the credit bureaus for three
months. But an interest will be charged by the card issuer on the unpaid
amount.
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