What is RBI Moratorium?

25/Jun/2020
WHAT DOES RBI DENOTE THROUGH MORATORIUM OFFERS

The global pandemic has curtailed the income of individuals and companies. People are losing jobs and those who have availed loans for running personal and business needs are going through a difficult phase in terms of repayments. While the cash flow problems were in the pursuit, RBI came up with loan moratorium offers as a relaxation for the distressed proportion of the Indian society.

Extension of moratorium on loan instalments has been a major break for those who are facing financial crisis due to reduction in their income or no income at all. This additional time provided by RBI is indeed a much needed regulatory relaxation for the public.

A number of organizations are running their operations on huge amount of bank loans. This crash crunch due to the global pandemic is very intimidating for these companies. However the moratorium offers proposed by RBI is the survival time that these companies got as loophole to escape from the harsh conditions.

What is RBI Moratorium?

Let us first understand this: What is moratorium? Moratorium period on loan is the specific time period for which no EMI is to be paid by those who availed loan from RBI recognized institutions. This specific period is termed is EMI holiday.

It was on March 27, 2020 that RBI first announced the allowance of a moratorium of 3 months on repayment of term loans taken from banks and Housing of Financial Companies (HFCs) outstanding on March 1, 2020. An allowance of further 3 month moratorium was announced by RBI on May 22 i.e. from June 1, 2020 to August 31, 2020 outstanding on March 31, 2020.

 

How to Opt for RBI Moratorium?

The decision is purely under the discretion of the borrower. It is better that borrowers do not opt for moratorium if they have enough cash flows. If your income has been affected due to job loss or pay cuts, then it will perfectly fine to choose the moratorium.

If you have submitted Standing Instruction (SI) to the banks from which you have availed loan, then EMI will continue to get debited from your account unless intimated otherwise to the bank. If you are choosing for moratorium for 3 months on your EMIs, then you will have to mail the bank indicating the same.

 

Will Moratorium Affect My Credit Score?

The result of availing loan extension will be different for different types of borrowers. If a borrower is in the first year of the loan tenure opts for moratorium, there will be significant extension of the interest pay out and tenure of the loan. The additional interest for 6 months will have to be paid by the borrower on a higher base. For those borrowers who availed the loan some years ago and have been repaying considerably, the interest rate will be relatively smaller and there will be smaller extension on the EMI tenure.

There have been questions raised by the bank loan borrowers regarding whether choosing moratorium will affect their credit score. RBI has assured that the non-payment of EMI between March 1, 2020 and May 31, 2020 will in no way affect your credit score. Banks will not submit any reports regarding such defaults to the credit bureau for these months prescribed by RBI when moratorium is applied on availed loans.

There will be remarkable asset-quality challenges for at least next two years for Indian banks in spite of all the regulatory measures taken. Also, it is speculated that Non-Performing Assets (NPA) could rise to approximately 200-600 basis points, depending on the stress level and individual risk exposures of banks.

 

Other Blogs

Seven Major changes in Income Tax Rules, in effect from September 1, 2019.

Government has introduced 7 new changes in the Incone Tax Laws that has come into effect from September 1, 2019

12/Sep/2019

SoP for Filing Kerala Flood Cess Return and payment

For filing return and payment of Kerala Flood Cess, every taxpayer has to register into the Kerala Flood Cess Portal available on the website of Kerala State Goods and Services Tax Department.

20/Sep/2019

Thirty seventh GST Council Meeting - Key Highlights

The 37th GST council has been held in Panaji on September 20, 2019.The meeting wrapped up with several decisions ranging from relaxations in annual return filing, rate revisions, deferment of new GST

27/Sep/2019

State Government to Levy Kerala Flood Cess

Kerala is still in the path of repossession after the trauma it got from the floods last year.

14/Jun/2019

How to Calculate Kerala Flood Cess ?

The government of Kerala has been given the green flag for levying 1% Kerala Flood Cess on goods and services.

17/Jun/2019

Highlights of Union Budget 2019

Check out the highligts of India Union Budget 2019 presented by Finance Minister Nirmala Sitharaman

24/Jul/2019

Central Government issues yet another amendment on Kerala Flood Cess

The latest amendment that is merged in Kerala Flood Cess is described below.

05/Aug/2019

What is GST?

The Goods and Service Tax (GST) is an indirect/consumption tax levied on the supply of goods. Currently, GST is divided into 5 tax slabs for collection of tax- 0%, 5%, 12%, 18% and 28%.The Goods & Service Tax came into effect on July 1, 2017 as per the 101st Amendment of the Constitution of India by the Indian Government.

05/Aug/2019

GST to Hire E-invoicing

E-invoicing is simply a form of electronic billing and it allows easy monitoring of transaction documents.

16/Aug/2019

GSTN Releases the New Return Prototype

GSTN has come up with a web-based prototype which is an interactive demo version of the "Offline Tools Of New Return"

20/Aug/2019

GSTR 9 : Annual Return Filing, Eligibility, Format & Rules

Last date to file GSTR-9 is 30 November 2019.GSTR-9 is an annual return to be filed once in a year by the registered taxpayers under GST.

02/Sep/2019

E-invoices replace GST Invoices: E-Invoicing Benefits, Implementation and How does it works?

E-invoicing is the electronic format of an already generated standard invoice. It facilitates the automation of multi-purpose reporting through one-time input of invoice details.

24/Oct/2019

Home Loan Benefits - Income Tax Deductions and Tax exemption on Housing Loan.

Details about the Tax benefit on Housing loan,Tax rebate on Home loan, Home loan interest deduction. Know more about Income tax exemption and home loan income tax benefit.

31/Oct/2019

What is Input Tax Credit under GST - How to Claim and Calculate it?

Input Tax Credit(ITC) reduces taxes paid on inputs from taxes that are to be paid on output. Input Credit Mechanism is available to you when you are covered under the GST Act.

08/Nov/2019

New Simplified GST Return Forms - Sahaj & Sugam

Sahaj & Sugam new GST Return Forms where announced by GST Council to ease the filing for registered GST taxpayers.

20/Nov/2019

Income Tax System In India - Complete Guide, Types, Rules, IT Returns, Slabs, e Filing

Income Tax is a tax you pay directly to the government based on your income or profit. Learn more about Income Tax slabs, filing process, deductions, refund, rules, calculations, TDS,Income Tax return

05/Dec/2019

Working of E-Invoicing under GST

E-invoicing, new GST invoicing format is starting from 1st January 2020 on voluntary basis.In this system GST network will generate a unique invoice number, also called unique Invoice Reference Number

12/Dec/2019

What if You DON'T file your Returns by December 31, 2019?

The final date for Income Tax Return filing is December 31, 2019. Every person whose total income in the FY 2019 exceeds Rs.2.5lakh are liable to file ITR.

19/Dec/2019

Key Highlights of 38th GST Council Meeting - 28% Tax on Lotteries- GSTR 9 & 9C Deadlines Extended.

Highlights of GST Council Meet - due date for GSTR-9 and GSTR-9C for the FY 2017-18 has been extended and 28% Tax on all lotteries. Find more updates from the 38th GST Council Meeting.

30/Dec/2019

What is Pre-budget Memorandum?

What is Pre-budget Memorandum? Who created Pre-budget Memorandum? Major suggestions in 2020 Pre-budget Memorandum.

13/Jan/2020

GST Revenue Collection

The GST collection has crossed 1 Lakh Cr for the second consecutive month. This indicates that the consumption has boosted despite all the initial chaos about GST.

23/Jan/2020

What is Reverse Charge Mechanism?

Reverse Charge Mechanism(RCM) in GST means that the receiver of the goods or services is liable to pay the tax and not the supplier.

28/Jan/2020

What is the income tax slab for FY 2020 - 21?

Find out the new Income Tax slab tax rates in India for FY 2020-21

11/Feb/2020

Employee State Insurance (ESI) - Here is what you should know...

This article familiarizes you about Employee State Insurance (ESI) Scheme and its eligibility, applicability and benefits for employees.

21/Feb/2020

Everything about GST Composition Scheme

Is GST Composition Scheme beneficial? Have a look on GST Composition Scheme in detail with its benefits, conditions, tax rates etc.

21/Feb/2020

39th GST Council Meeting

The 39th GST Council Meeting has been held on March 14, 2020 at New Delhi. Here's all you need to know.

19/Mar/2020

IGST: What to Know & Its Overview

GST has many tax subsets alongside rules and sections to follow. What IGST is and what are the associated elements of it are illustrated here...

30/Mar/2020

ITR filing deadline for FY19 extended till 30 June 2020

Income Tax & GST Return Extended till June 30 owing to COVID-19 Outbreak!

07/Apr/2020

Corona Virus: Rs 1.7 lakh cr economic relief package announced by Finance Minister Nirmala Sitharaman

FM Sitharaman is announcing the most-awaited economic relief package amid the Covid-19 pandemic.

16/Apr/2020

Online Income Tax Challans

Income Tax Payment with Online Challans. Find about how to pay advance tax, self assessment tax online.

05/May/2020

A Complete Guide On Job Work Under GST India

The GST Act makes special provisions with regard to removal of goods for job-work and receiving back the goods after processing from the job-worker without the payment of GST.

08/May/2020

What is GST Return?

Complete guide about GST Returns - The different types of GST returns, who should file these returns and when to file GST returns. Read now

03/Jun/2020

Highlights of 40th GST Council Meet

Highlights of 40th GST Council Meeting dated 12th June 2020.

30/Jun/2020

What is GST Demand & Recovery?

As per the provisions of recovery of tax in GST, if the amount payable by a taxable person, remains unpaid, even after 3 months from the date of issuing the order for demand of tax, then the recovery of tax under GST will be initiated.

04/Aug/2020

GST Return due dates

GST return due dates and interest related queries have been extended and solved respectively through the various circulars and notifications published by the government.

07/Aug/2020

Types of GST

The GST types are determined based on the province in which the goods and/or services are exchanged and transactions made. The types of GST include: • Central Goods & Services Tax (CGST) • State Goods & Services Tax (SGST) • Union Territory GST (UTGST) • Integrated GST (ITGST)

19/Aug/2020

What is GST Framework?

GST framework is a design made by the India Government that would eliminate most of the indirect taxes like VAT, customs duty, excise duty, CST, service tax, entertainment tax, and bring it all under a single tax structure called GST.

20/Aug/2020

GST Classification

GST classification is the diverse broad categories into which goods and services are categorized, taking into consideration certain specific set of factors.

21/Aug/2020

GST Registration

GST Registration is that part of the GST regime in which every business with turnover of Rs.40 Lakhs should register as a normal tax payer. The threshold turnover limit for GST registration for NE and hill states is Rs.10 lakh.

28/Aug/2020

What is GST Compensation Cess?

The GST Compensation Cess will compensate the states for any revenue loss incurred on implementing Goods & Service Tax (GST) on July 1, 2017 for a period of 5 years or as the GST council recommends

14/Oct/2020