No EMI payments for home, car, and corporate and other loans for 3 months says RBI

Insider InjestBI India
  • Reserve Bank of India (RBI) governor Shaktikanta Das said that repayment on loans across the board are deferred for a period of three months.
  • This includes retail loans like those taken out for cars, home and education, along with corporate loans.
  • The credit rating of those who have taken out loans but are unable to pay immediately won’t suffer.
The novel Coronavirus pandemic has thrown the economy for a toss and the 21-day nationwide lockdown had many people worried how they would pay off their loans. Providing some much-needed relief, the Reserve Bank of India ( RBI) has decided to defer payment on term loans for the next 3-months.

This includes all loans across the board, including retail loans — like those on cars, homes and education, in addition to loans by corporates. “All commercial banks including regional, rural and others are being permitted to allow 3-month moratorium of payment of installments on all terms loans outstanding as on March 1,” said RBI governor Shaktikanta Das.

The 3-month moratorium implies that the collective interest of those 3-months — the equated monthly installments (EMI) — will only be due after the expiry of the deferment period.

"The moratorium of 3 months for all term loans and deferment of interest on working capital by 3 months will be very helpful at this point when most businesses are unable to have a steady cash flow," said Shishir Baijal, chairman and managing director of Knight Frank India.

In addition, during the moratorium, not paying the EMI on any loan will not result in an asset classification downgrade. This means the credit rating of those who have taken out loans but are unable to pay immediately won’t suffer.

"Developers now get breathing space to get their financial act together, at least for now. Moreover, the fact that non-payment of EMIs will not cause loans to turn bad is a major relief," said chairman of ANAROCK Property Consultants, Anuj Puri.


After Finance Minister Nirmala Sirtharam’s press conference yesterday — in which she announced a $22 billion relief action plan to battle the impact of Coronavirus — India’s middle class was left wondering how they would tide through the testing times.

A similar approach was announced by the US Senate on March 26 when they decided to defer student loan payments for the next six months.

See also:
RBI governor Shaktikanta Das cuts interest rates by 75 basis points to 4.4%