RBI’s EMI Moratorium: A Deferral Or Waiver?


Sitting in the tranquillity of our homes, nibbling on the comfort food, new DIY ideas and social media full of quarantine stories, many of us are trying to thrive on positivity until we experience the real financial shock of the economic disruption. The one created by the disturbed mundane demand-supply cycle during the time of lockdown. While many businesses continue to operate with ‘work from home’ solutions, many others remain deprived of stable revenue for their survival. Amidst the hindrance in the flow of liquidity between the businesses, the economy is predicted to collapse with a domino effect.

To ease the traction, the Reserve Bank of India (RBI) has offered a moratorium on the equated monthly instalments (EMI) payments. This means that the financial institutions of the nation will accept the deferral in the payment of monthly dues and credit card bills by three months. While this seems like a feasible solution, what one might not anticipate is a lingering debt-trap that might lie on the other end. Wedding Affair urges the young professionals to read between the lines and understand the catastrophe this moratorium might be capable of. Read on to make an informed decision regarding your due payments.

1. Interest To Be Accrued On Deferred EMIs Of Term Loans

The Financial Express

This deferral bracket is applicable on all term loans, including home, auto, education, personal and credit card dues. The central bank has made it clear that interest will continue to accrue during the period. As per the details published on several bank websites, one needs to understand that this is just a reprieve and not a waiver. Interest will be accrued on your deferred payments, which means you end up paying higher amounts of instalments post moratorium. Hence, it is advised that those who have the liquidity to honour their dues must do it right away, as a waiver will only add an unnecessary expense because your savings account will give much lower interest than what you would be paying on the loan.

2. Steep Interests On Credit Card Bills And Credit Card Loans

Currency Live

This particularly proves lethal because of the steep interest rates on credit card bills and loans. Moneycontrol also states that being unsecured loans, the interest charged is exorbitant, upwards of 40 per cent per annum. Interest accrued on your credit card bill could balloon to an unmanageable amount if you do not make attempts to clear the dues.

Hence, it is advisable to act smartly with moratorium by reading between the lines of these deferral conditions to avoid burying yourself into a debilitating debt-trap. If you can, pay your dues right away to render you a little cushioning against the future blow.


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