Loan repayments will become due starting today — here are the options that borrowers have

• The Reserve Bank of India’s (RBI) six-month moratorium came to an end on August 31, and payments are set to come due, starting today.
• The Supreme Court is yet to announce its verdict on whether the interest accrued during that time will be waived, leaving many borrowers wondering what they should do.
• Those who aren’t in a position to make payments, waiver or not, have the option to go for a one-time restructuring of loans.

The Reserve Bank of India’s (RBI) pause on repayment of interest on loans for the past six months came to an end yesterday, August 31. Even though the government is yet to take a stand on whether or not the interest accrued during the moratorium period will be waived off, the payments for borrowers are going to start coming due from today.


As a borrower, you fit into one of three categories:

1. Someone who didn’t avail the moratorium
2. Someone who availed the moratorium and is still facing financial difficulties
3. Someone who availed the moratorium but only for the sake of keeping liquidity on hand

Someone who didn’t avail the moratorium
If you’re a borrower that did not avail the moratorium facility offered by the RBI over the last six months, nothing changes. Your monthly payments continue as is, and there is no change in your overall loan payments scheme.

Someone who availed the moratorium but can afford to pay
Not everyone who availed the moratorium was facing a financial crisis. Someone did it to ensure that there was some extra cash on hand in case things took a turn for the worse.

Even with the matter of interest waiver pending with the Supreme Court, banks are likely to recommend a one-time payment rather than letting interest accrue further. According to the RBI, an interest waiver could lead to a loss of ₹2 lakh crore for banks in India.

“If you have taken a moratorium, the bank will suggest depositing as much amount as you can,” a bank manager at one of India’s leading public sector banks told Business Insider. According to them, even if the Supreme Court decides to waive interest, the amount will go towards advance loan paid.

Someone who availed the moratorium and is still facing financial difficulties
Not every business has been impacted equally during the coronavirus lockdown — some have taken a bigger hit than others. Take the tourism industry as an example. India’s gross domestic product ($4) data released yesterday shows how the trade, hotels, transport & communications showed the biggest dip in real gross value addition (GVA).

So, if you’re one of the many who is still not in a position to make payments, you have the option to approach your bank to restructure your loan. This could mean smaller payments over a longer period, an extension of the moratorium, or relaxation of interest rates.

“We look at restructuring of loans as a last resort. It’s only for customers you really need it, and there are no other options left to explore,” said the source.


All types of loans, whether its a personal loan or a corporate loan, can apply for restructuring provided they meet the RBI's eligibility requirements — like you should not have defaulted on your loan payments as of 1 March 2020 or within 30 days of that day. The outstanding amount of debt at that point of time will be considered for restructuring.



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