The relief for the borrower related to EMI at COVID-19, Lockdown.

IBA, Indian Banks’ Association, a Legal Department deals with the issues arises in the banks, financial institute, etc. This Association has a right to manage the banks. So it had some directions or wish-list for the RBI, on date March 21, 2020. After the RBI announced a stay on repayment for 3 months, till May on all term loans outstanding as on March 1, 2020, to borrowers of all commercial banks, it includes all type of banks, rural or urban both. RBI announced the stay that is beneficiary for the person whose income has been affected by COVID-19, Lockdown or who earn on a daily basis and they also thought that they don’t have to pay the EMI for this 3 months of Lockdown which is incomplete news. The complete news is that, the RBI stay on EMI, not on the interest. So it means that they don’t have to pay the EMI till May but the interest goes on that EMI for 3 months they have to pay the interest after May. It means they have to pay extra 3 months interest. So, it is taken as a back draw for the borrowers of banks.

IBA, on March 21, 2020, framed a wish-list for the RBI and in that the main demand, is the request to delay the term of loan installments for 6 Months.

On this demand, there is a statement by CEO Sunil Mehta as supporter of the demand. He said that “Suppose a borrower has lost his or her job due to this crises then the loan installments could be deferred by 6 months. But if there is a partial impact like delay in salaries then deferment could be less. The extension for the repayment should be done without downgrading of the asset”.

This relief is also not compulsory for everyone, actually this is upon us want to pay EMI or use the relief.