Q: Hi sir. I’ve been servicing a personal loan for a while now whose tenure is supposed to end in the next 2 months. Now this RBI’s decision to permit banks to allow a 3-months moratorium has left me a bit confused. My cashflow remains the same and I actually don’t want my loan to get extended because of this moratorium. My question is: can I still go ahead and pay the last 2 EMIs despite the moratorium? – Sanjeev Mitra
Ans: You have a valid question and the RBI’s recent moratorium decision to help borrowers better manage their finances due to the Covid-19 pandemic has actually confused some people. As you have correctly mentioned in your question, the central bank has permitted all lenders to allow their borrowers a 3-month moratorium. The lenders are expected to quickly formulate their policies and inform their borrowers how they are going to implement the moratorium. So, my first advice to you would be to wait for a clear directive from your bank regarding the same. Don’t take any action, like discontinuing your EMI auto-debit standing instruction, before you get complete clarity from your bank.
A collateral-less financing facility like a personal loan is an expensive loan, hence it’s understandable that you would want to clear it at the earliest. In your case, following the moratorium when implemented by your bank would only mean extension of the loan tenure. Thus, in my opinion, there should not be an issue if you want to repay your loan EMIs even during the moratorium. Perhaps the best thing to do would be to get in touch with your bank or look for any email or SMS from your bank to get complete clarity.
Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil. The writer is CEO, BankBazaar.com, an online marketplace for loans and credit cards.