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Major PSU banks pass on three-month EMI moratorium to borrowers

HYDERABAD: Indian banks on Tuesday rolled out the 3-month moratorium on all term loans and deferral of interest payments on working capital loans.

This means, EMIs on home or auto loans due on and from Wednesday or April 1, can be deferred for three months and the next installment can be paid only in June if the borrowers so desire. It means, the repayment schedule gets extended accordingly and interest will be charged extra for three months on the total outstanding loan amount.

Almost all banks are extending the moratorium to all outstanding accounts by default. For most banks, EMI deductions are system-generated at a prefixed date and time, usually the first week of the month and the deduction will be time in the first banking hour of the day.

But for next three months, banks will deactivate the automatic switch calling in payments. However, customers willing to pay as per schedule can opt-out of the moratorium, though the process differs from bank to bank.

While some like IDBI Bank have offered an opt-out option on their website (includes writing an email to the bank), others like Canara Bank have requested customers to get in touch with their respective branches.

“To avoid unnecessary paperwork the facility has been extended across the board to all the borrowers by extending the facility of Term Loan instalments (includes interest) by 90 days. The original repayment period for Term Loans will get extended by 90 days e.g. a loan repayable in 60 instalments maturing on March 1, 2025 will mature on June 1, 2025,” Central Bank of India clarified on its website.

Chennai-based Indian Overseas Bank not only deferred EMI payments for term loans but has also slashed its repo-linked lending rate from 8 per cent to 7.25 per cent with effect from April 1, thereby benefitting MSMEs and retail loans.

Similarly, Punjab National Bank, State Bank of India, Syndicate Bank have also  deferred interest on term loans. As per the RBI direction, moratorium is applicable on all term loans including principal and/or interest components, bullet repayments, EMIs, credit card dues falling due between March 1 and May 31.