RBI extends moratorium on EMIs for three more months till August 31

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The central bank refrained from giving a projection for GDP growth for the current financial year, as it stopped at saying GDP growth expected in the "negative territory" with some pick-up in growth impulses from the second half of 2020-21 onwards.

He said the decision to extend the moratorium period for loans is a significant negative for private banks, both in the medium and long term.

In his previous addresses post the COIVD-19 outbreak and lockdown, the RBI governor had announced a series of measures to infuse liquidity into the banking system and support the economy on 27 March and 17 April.

The two moves will effectively benefit the auto and bike owners who are now paying EMIs for their vehicles, as well as prospective buyers. Under normal cicircumstances, the deferment of loan repayments has an impact on the borrower's credit history and risk classification. This includes all forms of retail loans, EMIs and credit card dues. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, were shifted across the board by three months. If you choose to maintain the EMI and reduce the tenure, which is advisable if you can afford it, you will save Rs 8.33 lakh on interest outgo, as the tenure shrinks by 25 months.

The moratorium on interest on working capital was also extended by three months.

However, borrowers need not repay the accrued interest in one go to banks post the moratorium period.

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In March, the central bank had allowed a three-month moratorium on payment of all term loans due between March 1, 2020, and May 31, 2020.

RBI governor Shaktikanta Das says a facility of Rs 15,000 crore line of credit for 90 days for United States dollar swap facility will be provided to EXIM Bank. He said that there will be a gradual revival of activity and demand by the second half of FY21 and that it is essential to instill confidence at this point of time.

"Assuming that economic activity gets restored in a phased manner in the second half of this year and taking in consideration favourable base effect, it is expected that combined fiscal, monetary and administrative measures now undertaken by both the government and RBI create conditions for gradual revival of activities in the second half of 2020-21". He also said inflation outlook is "highly uncertain".

Headline inflation may remain firm in the first half of the year and may ease in the second half.

This, the Governor attributed to current global demand-supply balance, low worldwide crude oil prices, soft global prices of metals and other industrial raw materials, which are likely to keep input costs low for domestic firms, deficient demand and volatility in financial markets.

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