EMI Relief unda emaina India lo?

[Kool_SRG]

RBI’s moratorium: Don't stop your loan EMIs if you can afford to pay

Know how to make the most out of RBI’s relief package for borrowers

Retail borrowers concerned about the impact of COVID-19 on their finances, and thus, their ability to repay their loans have got some breathing space, thanks to the Reserve Bank of India’s (RBI’s) mega relief package announced on Friday.

They stand to benefit from the policy rate cuts, and a moratorium on all term loans, including home, auto, education, personal and credit card dues. The measures will benefit especially those whose equated monthly instalments (EMI) are due between March 1, 2020 and May 31, 2020. Considering the state of paralysis the domestic and global economies are slipping into, the RBI has given borrowers a lifeline to tide over any temporary financial crunch.

Choose shorter tenure, not lower EMIs

 

The repo rate cut of 75 basis points – from 5.15 per cent to 4.4 per cent – will mean huge savings on interest outgo for retail borrowers, particularly the ones whose home loans are linked to repo rates.

The State Bank of India (SBI) late on Friday evening announced transmission of the 75 bps cut to its repo-linked home loan borrowers with effect from April 1, as also a 20-50 bps reduction across tenures in retail deposit rates from March 28. Its repo-linked lending rate (RLLR) now stands reduced to 6.65 per annum from 7.40 per cent earlier. The new effective home loan rates will start from 7.15 per cent, down from 7.9 per cent at present. “Consequently, EMIs on eligible home loan accounts (linked to an external benchmark rate/RLLR) get cheaper by around Rs 52 per 1 lakh on a 30-year loan,” the SBI said in a statement.

All retail floating rate loans sanctioned by banks after October 1, 2019 have to be linked to an external benchmark – it’s the repo rate for most banks. These borrowers will benefit from a 75-bps rate reduction, when their bank resets the rates, which is once a quarter. “Banks tend to extend the loan tenure where possible and reduce the EMI. However, if you can afford to, it’s best to keep the EMI intact, so your overall interest payable goes down and your loan can be paid off faster,” advises Vipul Patel, Co-founder, Mortgageworld.in, a loan consultancy firm.

Even if your loans are linked to banks’ marginal cost of funds-based lending rate (MCLR), you will see your interest rates soften, as banks pass on the benefit of lower cost of funds to you. SBI has indicated that it will take a call on MCLR on April 20. If your bank does not pass on the entire benefit of RBI policy action, look at switching to an external benchmark-linked home loan. Even if current MCLR and repo-linked interest rates are comparable, the greater transparency that the latter offers makes it a useful proposition for borrowers.

Apart from the repo rate cut, the central bank has also slashed the cash reserve ratio (CRR) by 100 basis points. “Overall, the ample liquidity in the system will lower the cost of funds, which in turn will be passed on to borrowers,” says Siddhartha Mohanty, Managing Director and CEO, LIC Housing Finance. While housing finance companies’ retail floating rate loans are not linked to external benchmarks, softening of interest rates in the system will be transmitted to borrowers. Again, you should adopt the same approach: partial transmission of rate cut should prompt you to first negotiate with your lender and then consider switching to another institution that offers better terms.

Moratorium, the last resort

The moratorium and its implementation have attracted more attention than the substantial repo rate cut itself. It will cover all term loans, including retail loans – home, auto, personal and education – and credit card dues.

However, banks and lending institutions are yet to formalise the operational nitty-gritties. “It will help borrowers affected by the cash crunch due to COVID-19 impact. Borrowers can contact us to avail of this deferment. We will soon have a board-approved policy in place to extend the moratorium to those who need the flexibility,” says Mohanty.

The lenders, however, are yet to decide whether the moratorium will be extended to all borrowers by default or they will be given the option to seek this flexibility. “Many borrowers have given us an electronic clearing scheme (ECS) mandate to deduct EMI payments. We will discuss and frame a strategy on how to implement this facility,” says Virendra Sethi, Head, Mortgages and Retail assets, Bank of Baroda.

Now, a moratorium leads to postponement of your EMI payments and is meant to be used only in exceptional circumstances. “If you can, you must keep meeting your EMI commitments. This, along with the drastic rate reduction can ensure that you prepay your loan ahead of schedule and save on substantial interest outgo in the process,” advises Patel. Loan consultancy firm Mortgageworld.in’s calculations show that if a home loan borrower with an outstanding home loan of Rs 45 lakh and balance repayment tenure of 300 months were to avail of the moratorium, she will net interest savings of close to Rs 11.59 lakh over the entire tenure in the current situation, provided she maintains the current EMI of Rs 34,731. However, if she does not opt for the moratorium, her savings would be higher, at close to Rs 15.39 lakh (see table). Therefore, use the facility only if you are in financial distress.

The central bank has made it clear that interest will continue to accrue during the period. “A moratorium is not an interest waiver. Affordability permitting, it is better to pay your EMIs instead of letting your funds idle away in a savings bank account that yields 3.25-4 per cent interest. Ultimately, you will have to pay your EMIs after the moratorium period ends,” says Gaurav Gupta, Founder and CEO, Myloancare, a loan aggregation portal.

Strive to pay off credit card dues

The RBI has clarified that credit card dues, too, are covered under the moratorium flexibility. However, credit card users should also remember that since moratorium merely defers the payment, your dues will continue to accumulate interest during the moratorium or until you clear the bills. While the burden could be manageable for home loan borrowers given the prevailing benign interest rate regime, this may not be the case with credit card users. Being unsecured loans, the interest charged is exorbitant, upwards of 40 per cent per annum. Interest accrued on your credit card bill could balloon to an unmanageable amount if you do not make attempts to clear the dues.

[Kool_SRG]

RBI's 3-month moratorium: Higher interest if you defer EMI payments

3 min read . Updated: 28 Mar 2020, 03:48 PM IST IANS

• RBI Governor Shaktikanta Das on Friday announced a three-month moratorium on EMIs of all term loans due during March 1 to May 31
• As of January-end, over ₹13 lakh crore of housing loans and ₹2 lakh crore of auto loans were outstanding, data with the Reserve bank of India shows

 

New Delhi: Be ready to pay higher interest on your outstanding loan if you decide not to pay EMIs on your home or auto loan for the next three months under a moratorium announced by by the Reserve Bank of India on Friday.

Analysts and experts tracking the sector said that simple interest rate would be calculated by banks for the three-month period in which loan repayment was due but was not paid under the moratorium. This would be added up into your EMIs at the end of three-month forbearance, raising your monthly bill.

So, if you're deferring payment of an EMI of, say ₹1,000, and the bank is charging interest at the rate 10 per cent on outstanding, you will end up paying ₹25 extra on each of the three EMIs that has not been paid during the moratorium. This additional interest may either be added up to all your future EMIs or your loan tenure could get extended at the same EMI level.

"Whether the customers will have to pay this additional interest in one go or will be allowed to get it adjusted as additional EMI is something that needs to be clarified by banks," said a financial sector analyst asking not to be named.

As a result of the moratorium, the tenure of such loans will get extended by three months which should be possible as floating rate loan contracts typically have a provision for extension of loan tenure.

If additional interest burden for three month amoratorium period is also equally divided in all future EMIs, the monthly bill for customer may increase or banks may decide to keep EMIs same but increase the tenure of loan by a few months.

"The 3-month EMI moratorium is a welcome move for those customers whose short-term cash flows are adversely affected by the coronavirus pandemic. This basically means that the customers may be allowed to defer their immediate EMI payments, but come June, they will have to resume the payments. It is not a waiver, but only a shift in payment schedules," Kunal Varma, CBO and Co-Founder, MoneyTap said.

Customers who have the ability to pay (such as salaried professionals whose incomes are still intact) should compare their original cash flows with the revised repayment schedules and accrued interest payments, and then take a call on what makes the most sense for them, he added.

The Reserve Bank Governor Shaktikanta Das on Friday announced a three-month moratorium on EMIs of all term loans due during March 1 to May 31 and said that the repayment schedule for all those loans would be shifted by three months after the moratorium.

This will bring relief to all borrowers, including those who have home loans, auto loans, education loans, agricultural term loans, retail and crop loans to their names. It will also be applicable on credit card dues.

"In respect of all term loans (including agricultural term loans, retail and crop loans), 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) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020," said the RBI's circular to all banks and non-banking financial companies.

"The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period," RBI said.

As of January-end, over ₹13 lakh crore of housing loans and ₹2 lakh crore of auto loans were outstanding, data with the Reserve bank of India shows.

Besides retail borrowers, micro, small and medium enterprises and large companies will also benefit from the RBI's relaxation of loan repayment.

 

 

@jefferson1      @Hydrockers

[Kool_SRG]

Six things to know about RBI's moratorium on EMI

 

• Though the moratorium covers all payments due between 1 March and 31 May, many borrowers might have paid their instalment for the month of March.

In a relief to borrowers who could be facing liquidity issues in paying their equated monthly installments (EMI) amid the nationwide lockdown, the Reserve Bank of India (RBI) on Friday allowed banks and other financial institutions to provide a moratorium of three months to all term loan borrowers.

The RBI has also instructed credit information companies to ensure that the credit score of the borrowers does not get impacted due to moratorium. Mint explains what it means for borrowers:

What type of loans will benefit from the moratorium?

As per the RBI circular, banks and other financial institutions are permitted to provide a moratorium of three months for all term loan installments which are due for payment between 1 March and 31 May. Term loans will include all kinds of retail loans such as vehicle loan, home loan, and personal loan, agricultural term loans as well as crop loans. The central bank has clarified that credit card dues will also be eligible for the moratorium. The moratorium will be provided for both interest as well as principal repayment, which means the moratorium is on your entire EMI.

Do I get an interest waiver?

Moratorium basically means you don't have to pay your EMIs for that time period and no penal interest will be charged. It is not a concession of any kind and is simply a deferment of the payment to provide some relief to borrowers facing liquidity issues. The RBI has clarified moratorium will mean that the repayment schedule for such loans be shifted by three months. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

The RBI has also stated that the moratorium is provided to help borrowers tide over the liquidity issues due to the pandemic. This is not a concession and will not lead to any change in the terms and conditions of the loan.

So how do I benefit?

There will not be an impact on your credit history if you avail the moratorium facility. Also, unlike salaried people, there are many people who don’t have a regular cash flow. Some of the salaried people might face pay cuts or delayed payments or layoffs due to the lockdown. Therefore the moratorium will benefit if you are facing liquidity as you can pay your bank or financial institution after 31 May.

Borrowers need to understand though the moratorium covers all payments due between 1 March and 31 May. Many borrowers might have paid their instalment for the month of March as most people give the ECS mandate for EMIs for the first week of the month. So, if you have already paid the EMIs or credit card dues for the month of March, you will get the benefit of only two months. “RBI has recommended a moratorium for three months starting March till May but most retail borrowers would have already paid their EMIs. It should ideally have been for April-June period," said Adhil Shetty, CEO, Bankbazaar.com, an online marketplace for financial products.

Do I have to pay my EMI next month?

It is not that you will not have to pay EMIs or credit cards due between 1 March and 31 May even if you would want to. It will not be automatic. Although most people await clarity in this regard, banks will most likely give people the option of moratorium. Those who want to continue paying the EMI or credit card dues will be able to do so. “We are still seeking clarity on this. Each lender will develop its own regimen around the moratorium implementation," said Raj Khosla, MD, Mymoneymantra.com, a financial services platform. RBI has asked banks to prepare board approved policies to provide relief to all eligible borrowers.

“RBI has rightly put the onus on the lenders to decide the terms of the moratorium, however it’s going to be fairly complex for every lender to come out with their own eligibility criteria. Hence one solution being evaluated is a 3 month moratorium to all retail borrowers with an option of opting out of the moratorium if one wishes so," said Shetty.

Who all can offer moratorium?

The RBI has asked all banks, financial institutions including housing finance companies, non-banking finance companies, small finance banks, regional rural banks, small finance banks, local area banks to provide moratorium. So, if you have a home loan from a bank such as SBI or housing finance company such as HDFC, both would provide you a moratorium.

Should I go for it?

As explained earlier, moratorium is not a waiver of any kind. So, your interest will continue to accrue for the time period of the moratorium. Also, the interest due during the period of moratorium will also get added to your outstanding amount and therefore will increase your burden when the moratorium will get over and you will start paying your EMIs. Therefore, you should opt for it only if you are facing a liquidity crisis else it will be better if you continue paying your EMIs regularly. “It’s important to remember that since this is a moratorium and not a waiver interest will continue to be charged during the moratorium and therefore people who can afford to pay their EMIs should stick to the schedule," said Shetty.

[karna11]

HDFC koda announce chesinda 3 months hault?

[Kool_SRG]

26 minutes ago, karna11 said:

HDFC koda announce chesinda 3 months hault?

Yes all banks... They will communicate via SMS also to the registered mobile number with them... 

But would say dabbulu unte katteyatam better else interest padataadhi... 

[karna11]

2 minutes ago, Kool_SRG said:

Yes all banks... They will communicate via SMS also to the registered mobile number with them... 

But would say dabbulu unte katteyatam better else interest padataadhi... 

goof info

[Kool_SRG]

2 minutes ago, karna11 said:

goof info

Follow on twitter adhe ippudu customer care channel.. 

[Hydrockers]

Dabbulu unte kattesukondi kaka

Intrest rate lu vachipotai anta

[Kool_SRG]

10 minutes ago, Hydrockers said:

Dabbulu unte kattesukondi kaka

Intrest rate lu vachipotai anta

Maamulu ga kaadu motham outstanding principle ki esi dobbutaaru... 

[karna11]

1 minute ago, Kool_SRG said:

Maamulu ga kaadu motham outstanding principle ki esi dobbutaaru... 

ind lo interest rates taggyyaaa?

[Kool_SRG]

7 minutes ago, karna11 said:

ind lo interest rates taggyyaaa?

Repo rate tagginchaaru ga already some national banks have reduced...Floating home loan vaallaki changes untaayi.. 

[Kool_SRG]

@karna11