Should You Opt for RBI’s Moratorium or Not – Check with EMI Moratorium Calculator

Updated on: 14 Dec 2021 // 29 min read // #mmm news
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The Reserve Bank of India (RBI) on March 27 suggested all banks, housing finance companies, and other lending institutions to provide their borrowers a moratorium period of 3 months on term loans. This moratorium is for payment of EMIs falling due between 01.03.2020 and 31.05.2020. According to the RBI’s announcement, the deferred instalments under this moratorium will include the following payments, falling due from 01.03.2020 and 31.05.2020:

RBI allowed this moratorium to help millions of people in the country with bank dues during the novel coronavirus pandemic. However, it did not order banks to provide such a relief. In fact, it gave the banks an option to take a call on whether they can extend the measure for customers.

In simple words, banks are not obligated to accept the RBI’s suggestion and can opt to avoid it on the basis of financial health.

Some of the leading banks, such as SBI, HDFC, PNB,etc., have announced that they will honour RBI’s request. However, the customers must be aware of the fact that it is a moratorium and not a waiver. Opting for moratorium willingly can make your loan costlier for you.

Covid 19 Emergency Loan Loan EMI Moratorium

Banks that are offering a 3-month moratorium will shift the repayment schedule and residual tenure of such loans by 3 months after the moratorium period is over. The interest will continue to accrue on the outstanding part of the term loans during the moratorium period.

If you avoid paying EMIs on dues, then lenders will calculate your interest on a higher amount every month.For high-ticket loans, such as home loans or vehicle loans, not paying EMIs for the next 3 months can increase the interest amount you pay significantly.

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Also, if you own a credit card, clearyour credit card dues before the due date, despite the moratorium option by RBI as credit cards usually charge a higher interest rate than other lending options. Late payments of credit cardscan significantly increase dues as they will get added directly to your bill.

You should not opt for the moratorium relief measure unless you absolutely need it. You should continue paying your credit card, EMI, and retail loan instalments if you are not financially strained by ongoing COVID-19 lockdown.

For better understanding, you can use Free EMI Moratorium Calculator to know how not paying off your EMIs during moratorium will impact you financially.

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Here are examples of home loan and personal loan:

EMI Moratorium on Home Loan

  • Loan amount: Rs. 50 Lakhs
  • Tenure: 30 years
  • Rate of interest: 8%
  • EMI: Rs. 7,338
  • Month when moratorium starts: 20 months


Total interest without moratorium


Total interest with moratorium


Additional interest amount to be paid on availing moratorium


Loan will be extended by

32 months

Excess interest divided by EMI


Excess interest divided by loan amount


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EMI Moratorium on Personal Loan

  • Loan amount: Rs. 10 Lakhs
  • Tenure: 5 years
  • Rate of interest: 11%
  • EMI: Rs. 21,742
  • Month when moratorium starts: 10 months


Total interest without moratorium


Total interest with moratorium


Additional interest amount to be paid on availing moratorium


Loan will be extended by

5 months

Excess interest divided by EMI


Excess interest divided by loan amount


From the examples given above, it is clear that opting for a moratorium of 3 months will prove to be a costly deal for you in a longer term. Hence, it is advised to make timely payments of your loan instalments if you can afford it during this situation without impacting your daily life.


✅ How is moratorium interest calculated?

During a moratorium period, the lender calculates your loan’s interest by applying the Simple Interestconcept. The interest will be calculated only on the amount that is actually provided and not on the entire loan quantum.

✅ What is the moratorium period in housing loan?

A moratorium period in a home loan is a length of time during which you do not have to pay your home loan EMIs. In other words, you do not have to start repaying your home loan EMIs as soon as your loan gets disbursed. You can avail an EMI holiday and start paying EMIs after a break.

✅ Who is eligible for a moratorium?

All existing customers of banks who have availed retail instalment-based loan or any other retail credit facilities before 01.31.2020 are eligible for the moratorium.

Customers having overdues before 01.31.2020 may also opt for it, and their requests will be considered by banks based on their merits.

✅ What will happen if you choose the EMI Moratorium?

If you choose the EMI moratorium, your lending bank will not ask for any EMI payment till 31.05.2020. However, interest will continue to accrue on your loan’s principal outstanding for the moratorium period at the contracted interest rate of the loan. The repayment tenure for the loan will be increased by the corresponding period for which you have availed the moratorium.

For example, if you have paid the EMI for March 2020 and availed moratorium for April and May 2020, then the tenure will be extended by 2 months.

✅ Is interest paid during the moratorium period?

Yes, the interest accrues during the moratorium period and you must pay it.

✅ What should I do if I don’t want EMI moratorium?

If you don’t want 3-months moratorium, you don’t have to take any action. If you don’t place a request for a moratorium, the bank will continue the existing repayment schedule. If you have received a call, message, or email from the bank regarding the same, just inform them that you don’t want to avail this benefit. However, if you skip the EMI payment during this period, it will be understood that you want EMI moratorium till May 2020.

✅ What is its impact on my credit score?

Availing the moratorium facility does not affect your credit rating or credit score in any way.

✅ Does this moratorium apply for credit card outstanding &loans on credit cards?

Yes, the moratorium is available on yourcredit card outstanding as well as loans on credit cards for payments due from 01.03.2020 till 31.05.2020.