Last week, RBI the apex body that controls the issue and supply of the Indian rupee made an important announcement. This was related to the after-effects of the Covid-19 i.e. the Coronavirus that has more than 750,000 cases worldwide.
With airports, businesses and countries shut, the Indian economy has taken a huge hit. We are now under a 21-day lockdown. RBI Governor Shaktikanta Das made an announcement where it would try easing this effect on the Banks and NBFCs.
Here are some of the key announcements made:
- The repo rate will be deducted from 5.15% to 4.40%.
- The reverse repo rate will be deducted from 4.90% to 4.00%
- CRR Balance reduced from 90% to 80%.
- A 3 month moratorium period on all term loans.
After these announcements, people have been confused as to what to expect. Hence we will clear all your doubts with these 4 important factors.
- Clarity is the key:
The main confusion among people is if they have to pay EMI for the next 3 months or no. The answer is “YES”. You will have to pay your loan EMI like you have been doing.
RBI has given the decision of a 3-month moratorium to the Banks and NBFCs. Only if your bank sends you a notification, you will get this benefit. If no, then you will continue paying off your loan EMI every month.
- 3 month moratorium doesn’t mean EMI free holiday:
If your Bank gives you this 3-month benefit, it doesn’t mean you will never have to pay for this. Your loan tenure will be shifted ahead by 3 months. Hence it is wise to not cancel your auto-debit of loan EMI from your account. Also, confirm with your Bank in case interest charges will be applied for this 3-month moratorium period.
- Borrowers that are struggling with their EMIs:
The 3 months are given because everyone is at home and expenses will arise. Also, there is a chance of loss of income. Hence you can utilize the EMI money for these expenses. We request you to save as much as you can and not spend unnecessarily. Cost-cutting will help you save money as once this period ends, you will have to repay the loan EMI again.
- Borrowers that can afford their EMIs:
If you’re sorted with your EMI’s then it is time to restructure your savings plan. You can increase your emergency fund or even take health insurance for your family. Also, even though the 3 months is applied for credit cards, it would be nice for you to pay them off first as high-interest charges (36-42%*) can be applied to them.
So here are some important things every term loan borrower must know. If you’re looking for the best loan deals in Mumbai today, Click Here