New Delhi: The Reserve Bank of India on Friday announced a massive 75 basis points cut in repo rates, as a measure to counter the economic slowdown caused by the COVID-19 pandemic on Friday. It also announced a 3-month moratorium on all outstanding loans.
This will help all borrowers to not pay any equated monthly instalments or EMIs for any loans including home loans, auto loans and education loans until June 30, 2020.
Usually, under normal circumstances if loan repayment is deferred then the borrower's credit history and risk classification of the loan will be affected. But according to RBI announcement on Friday, availing this moratorium will not impact the borrower's credit rating or cause any penalties.
RBI also clarified that financial institutions can allow three-month moratorium on repayment of credit card dues.
The RBI in its statement had said, "All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all -India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) ("lending institutions") are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months. "
The loan EMI payments will restart only after the moratorium time period of 3 months is completed.