Moratorium: Relief or pain?

Chennai: When the announcement about the loan waiver was made ‘to overcome the crisis’ of coronavirus, people were a bit relieved that they might not have to face financial burden during the pandemic.

However, now that most banks have given the guidelines for availing the moratorium, many are not happy with the way things have turned out.

Individuals and business people feel that the moratorium has actually come as a burden than a relief. Applying for it comes with a cost as most banks have asked people to pay interest for the three months that they avail the exemption.

‘A few banks are asking an undertaking stating that the additional interest will be paid in the month of June itself. There is no point in the moratorium if people are asked to pay the interest in June. This is actually a burden than a relief,’ said Santhosh, an entreprenuer.

He further said the government should take steps to waive off the additional interest. ‘At least the additional interest should be split till December which will give some time for the borrower,’ he added.  Meanwhile, with the beginning of the new month, several banks have started deducting EMIs through ECS.

Silambarasan, a resident of Tambaram said, ‘I was shocked to see that EMI was deducted from my account. When I approached the bank they said they will refund it if I opt for the scheme, but added that I will have to pay interest for the three months. So, I did not opt for the moratorium. What is the point in this waiver if it does not help people like us?’

‘Opting for the moratorium is entirely the customers’ choice. We understand that all our customers may not opt for the moratorium given that there is an additional levy of interest payable under the terms of the moratorium. If you wish to opt for the moratorium, we would be happy to refund the EMI debited and register your loan account under the moratorium process,’ a release from the HDFC bank mentioned.

Banks have also said that if the customer has paid the EMI for the month of March and has opted for a moratorium for April and May, then the loan tenure will get extended by two months.

It may be noted that PMK founder S Ramadoss pointed out that each bank has taken different approach in granting the relief, but have been united in saying that interest would be accumulated for the three months.

‘This is unfair and goes against the concept of relief for affected people. This loan deferment exercise should not become an eyewash,’ he said.

On 27 March, the Reserve Bank of India (RBI) said that all lending institutions, including banks and housing finance companies, will have to give their borrowers a three-month moratorium on term loans. The moratorium was for payment of all instalments falling due between 1 March and 31 May.

NT Bureau