Confusion prevails among borrowers over three-month moratorium as many get EMI reminders

With many getting payment reminders, confusion prevails among borrowers, term-plan investors and credit cardholders over the implementation of the three-month moratorium on all loan repayments amid disruptions caused by the coronavirus outbreak.

As part of measures to alleviate hardships faced by people, the Reserve Bank, on March 27, announced a slew of steps, including a three-month moratorium on loan repayments.

Many borrowers, credit cardholders and mutual fund investors have received SMSes from their lenders reminding them that they need to maintain sufficient balance on the due date. Among others, such messages have been received by people who have taken personal, auto and home loans.

An SBI Cards customer from the city received an SMS on Sunday asking him to pay the minimum balance for payment on the annual charge even though the person is yet to activate his credit card.

On Saturday, a Navi Mumbai homemaker who has a monthly investment plan from ICICI Lombard received a message asking her to maintain the EMI amount in the bank account. On Sunday, her husband got a call from his insurance broker regarding payment towards a plan taken from HDFC Ergo.

An American Express credit card customer from the city also received a payment reminder on Monday.

When contacted, a public sector bank official admitted that such messages are being sent to customers as the moratorium decision has to be approved by the board of each lender but in many cases, the board meetings have not taken place due to the nationwide lockdown.

According to a banker, customers would have to inform their banks that they want to avail the benefit of the moratorium.

"Wherever there is a standing instruction, the customer has to inform the bank that he or she wants EMIs to be deferred. Otherwise, instalments will be deducted," a senior public sector banker said.

RBI has taken a slew of measures, including a 75-basis points cut in the repo rate, in the wake of the situation arising out of the outbreak of coronavirus, which has infected more than 1,250 people and has claimed over 30 lives so far in the country.

There is also a three-month moratorium on payments on all types of loans and lenders have been directed not to treat such non-payments as NPAs or make bad loan provisions for them.

The regulator has asked credit information bureaux not to report non-performing assets during the moratorium period.

Another senior banker told PTI that the moratorium should not be seen as a kind of write-off.

"This is not a loan write-off by the government. This is just an option to delay the payments for those customers whose jobs have been affected due to the lockdown or salaries been delayed because of the same.

"Ultimately, each customer has to clear his or her dues and even the interest component of the three EMIs (Equated Monthly Installments) during the moratorium period will accrue to the principal, the banker said.