Battles are being fought against the deadly Coronavirus on multiple fronts. While the Government has announced several health measures there's also a huge impact on the economy owing to the 3-week lockdown. Just a day after the Finance Minister announced a ₹ 1.7 lakh crore stimulus package to help ease the distress on the economy, the Reserve Bank of India today came out with its own set of measures of aid in these challenging times. These included a moratorium on loan repayments and change in repo rate.
The one step that has brought about the biggest cheer in these gloomy times is the 3-month moratorium on loan repayments. This means your EMIs will be pushed back by 3 months and you do not need to pay installments on existing loans until the month of June. This is surely going to benefit lakhs of vehicle owners who have running loans on their cars and bikes.
A circular issued by RBI earlier in the day said "In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) ("lending institutions") are permitted to grant a moratorium of three months on payment of all instalments1 falling due between March 1, 2020 and May 31, 2020."
Automobile Industry body Society of Indian Automobile manufacturers' (SIAM) welcomed the steps taken by the Reserve Bank and said this would help increase consumer confidence in these difficult times.
Commenting on the announcements by RBI Governor, Mr Shaktikanta Das, SIAM President, Mr Rajan Wadhera, stated, "We are happy to see many of SIAM suggestions, like 3-month moratorium on loan repayments, repo rate reduction, have been announced by the RBI to infuse liquidity amid these unprecedented times. These measures will certainly provide relief to people & businesses. We hope banks will pass on the repo rate reduction in the form of interest rate reduction to businesses and consumers."
RBI also added that the repayment schedule for loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period, the Central bank added.