The installment period was extended but the Modi government also knocked on the back door
Ahmedabad, 26 May 2020
The RBI has given relief in bank loan repayments to people whose business has come to a standstill due to the ongoing lockdown in the country following the Corona virus. EMI can be extended up to 3 months. The RBI has said that doing so will increase your total payment burden. Because interest will continue to rise during this period. What is the total interest.
If a customer has taken a car loan of Rs 6 lakh, with an EMI period of 54 months left, he will have to pay an additional interest of Rs 19,000 due to the 3-month EMI extension facility. This interest is equal to 1.5 EMI.
The RBI has given a six-month repayment of EMI to relieve loan holders affected by lockdown and Koro epidemic. At first glance, this announcement sounds quite comfortable but experts say that the interest on the loan will continue during this period, which could give borrowers a double whammy in the near future. This is the reason why only 20 per cent of SBI’s customers opted for the first round of discounts.
The ability to borrow can be affected
Banking experts say that the debt of customers who have chosen not to pay EMIs does not fall under the purview of NPAs or will have no effect on their CBIL. Despite this, it will affect their ability to borrow for the next one year.
Banks will be cautious in lending
Banks will be very careful in lending to such customers and will hesitate to give them new EMI based loans or increase their loan limits. Many bank officials say the ability of such customers to pay the total EMI after the relief period has passed is in doubt. As well, there will be uncertainty over the next few years on the sustainability of the business of borrowers.
Customers availing EMI discount from the bank can be given three options for payment.