Public Sector Banks start deferring EMI payments by 3 months, SBI takes lead
Customers who receive EMI payment notice at the beginning of every month can heave a sigh of relief as banks have decided to defer receiving such payments for a period of three month under the terms of a Covid 19- RBI package announced on Friday.
 
Several banks, including State Bank of India, sent tweets on Tuesday informing the customers that they have deferred payment of EMIs of housing loan, vehicle loans, MSME loans and payment of all other term loans whose installentins are due after March 1 and up to May 31 by three months.
 
The system of deferment will function automatically as most banks would not raise demand for EMIs for next three months. The repayment period post the moratorium will also get extended accordingly.
 
The scheme would be available to all borrowers having standard account with the bank, meaning they have no record on default in the past.
 
However, customers who do not want to defer their EMIs and want to continue paying their loan instalment will have to inform banks that they don't need to utilise the moratorium on payments.
 
Banks have also issued mailers and put FAQs on their sites informing the customers about the scheme.
 
It is expected that several customers may opt out of the EMI deferment as during the the said moratorium period, interest shall continue to accrue on the outstanding portion of the term loan. The interest accrued will be added to the outstanding loan amount and the repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period.
 
"Bank of Baroda is providing a moratorium of 3 months on payment of a ll instalments falling due between 01.03.20 & 31.05.20 for all term loans in cluding corporate, MSME, agriculture, retail, housing, auto, personal loans, etc. in pursuance of the RBI COVID-19 Regulatory Package," the PSU bank said in a tweet.
 
Analysts and experts tracking the sector said that simple interest rate would be calculated by banks for the three-month period in which loan repayment was due but was not paid under the moratorium. This would be added up into your EMIs at the end of three-month forbearance, raising your monthly bill.
 
So, if you're deferring payment of an EMI of, say Rs 1,000, and the bank is charging interest at the rate 10 per cent on outstanding, you will end up paying Rs 25 extra on each of the three EMIs that has not been paid during the moratorium. This additional interest may either be added up to all your future EMIs or your loan tenure could get extended at the same EMI level.
 
While the clarity has not been offered by banks, the EMI deferment would actually benefit customers to defer two instalments falling due in the months of April and May as from June regular EMI payment will start with the instalment getting higher (including principal and interest two months instalment) or if EMI is maintained at original level, the tenure of repayment gets extended as additional interest gets adjusted in all future EMIs.
 
The Reserve Bank Governor Shaktikanta Das on Friday announced a three-month moratorium on EMIs of all term loans due during March 1 to May 31 and said that the repayment schedule for all those loans would be shifted by three months after the moratorium.
 
This will bring relief to all borrowers, including those who have home loans, auto loans, education loans, agricultural term loans, retail and crop loans to their names. It will also be applicable on credit card dues.
 
As of January-end, over Rs 13 lakh crore of housing loans and Rs 2 lakh crore of auto loans were outstanding, data with the Reserve bank of India shows.
 
Besides retail borrowers, micro, small and medium enterprises and large companies will also benefit from the RBI's relaxation of loan repayment.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Mallya reiterates offer to return bank dues, seeks Centre's help
    Fugitive liquor baron Vijay Mallya on Tuesday reiterated his offer to return the money he owed to a consortium of Indian banks, and sought Centres help in view of the nationawide lockdown in India.
     
    "India is under a lockdown, and we respect it. But the functioning of my companies has stopped due to lockdown. All production has shut, but we are still not sending back our employees and thus paying for it. So, the government should help us," Mallya, who is staying in the UK after fleeing India, tweeted in the morning.
     
    Mallya said that he had made offers to return the outstanding dues many times but neither the banks nor the Enforcement Directorate were cooperating.
     
    He said that he hoped that Union Finance Minister Nirmala Sitharaman would listen to him in this hour of crisis.
     
    Mallya, who is staying abroad for the last four years, is not willing to return to India to face charges. He allegedly owes more than Rs 9,000 crore to 13 Indian banks.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Undeterred by Covid-19, govt goes ahead with PSU banks merger
    The government is going ahead with the plan to consolidate public sector banks, undeterred by the spread of Covid-19 that has disrupted business across the country, including banking operations.
     
    Accordingly, the amalgamation of the Oriental Bank of Commerce and the United Bank of India with the Punjab National Bank; the Syndicate Bank into the Canara Bank; the Andhra Bank and the Corporation Bank into the Union Bank of India; and of the Allahabad Bank into the Indian Bank is being completed on schedule and will be effective from April 1.
     
    In a press release on Saturday, the Reserve Bank of India said that branches of Allahabad Bank will operate as branches of Indian Bank from April 1, 2020. Similarly, branches of Andhra Bank and Corporation Bank will operate as branches of Union Bank of India from the appointed date.
     
    All customers, including depositors of amalgamating banks, will automatically be transferred to the principal bank under the merger process, the RBI said.
     
    The Narendra Modi-led government had announced the mega merger in August last year. Earlier this month the cabinet gave its approval for the mergers that will consolidate operations of 10 public sector banks (PSBs) into four 'mega banks'.
     
    Though the other two merger schemes involving the amalgamation of the Oriental Bank of Commerce and the United Bank of India with the Punjab National Bank and that of the Syndicate Bank into the Canara Bank are getting implemented from next month, the RBI did not offer information on its progress.
     
    It was widely expected that the government may defer the consolidation exercise for some time due to the Covid-19 related disruptions. But as all banks involved in the process are government entities and there is no immediate plan to restructure branches or move employees, it was felt the process could go ahead unhindered. There would only be a change of name for a few banks but all will remain under the PSU tag.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Ramesh Popat

    2 months ago

    Daring, thrilling, breath taking decision!

    REPLY

    m.prabhu.shankar

    In Reply to Ramesh Popat 2 months ago

    Sir, which one ? Changing the name ?

    Meenal Mamdani

    2 months ago

    The govt reckoned that with the stay home order in place, bank employees will not be able to hold protests, at least for now.

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