Money & Banking

RBI moratorium: Borrowers await clarity from individual banks

NARAYANAN V Chennai | Updated on March 29, 2020

The Reserve Bank of India on Friday permitted banks to allow a three-month moratorium on EMIs for all term loans due from March 1. While the announcement came as a major relief to millions of home-, auto-loan borrowers and credit card users, the Central bank’s decision to leave the final say with individual lenders is keeping the borrowers on tenterhooks.

According to RBI’s ‘CovidD-19-Regulatory Package’ guideline, all commercial banks, co-operative banks, NBFCs (including housing finance companies) are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1-May 31, 2020. However, the guideline also added that “Lending institutions shall frame Board-approved policies for providing the above-mentioned reliefs to all eligible borrowers.”

In effect, the RBI has allowed individual lenders to decide whether to allow or deny the relief to its customers. The lenders will also get to decide if the relief will be extended to all customers or for only those who apply for it.

Borrowers’ concerns

“I have two EMIs due in the first week of April. Now, I am not sure if I should keep my accounts funded or pay after three months, ” said Bipin Shrestha, who works for a leading IT company in Mumbai.

Shrestha, who has a home loan from ICICI Bank and a car loan from HDFC Bank, claims neither of the banks have sent any communication so far.

Amit Chaurasiya, who works as a senior engineer in a Mumbai-based company, also has a similar concern. Although Chaurasiya’s home loan EMI with HDFC Bank is due only on April 15, he is worried about his eligibility for the RBI-provided relief since his income for the subsequent months looks uncertain.

“We are already working from home. This month, we got our salary but from next month onwards, we are not sure. We are already under a financial crisis and if the lockdown extends then we will not be able to pay our EMIs,” Chaurasiya said.

Hari, who works in a Chennai-based firm, has a two-wheeler loan with HDFC Bank. With no formal communication from the bank, he has written email to customer care and awaiting for their response to decide on the next course of action.

Customer queries

With bank branches and customer care centres working with fewer staff due to lockdown, Twitter handles of leading banks are swamped with customer queries about the RBI announcement.

“Many of you have written to us following the announcements made on March 27 by the RBI. We are studying the notification issued by the Regulator and will communicate the details shortly. Thank you for your patience. Stay Safe! Bank From Home!” read a tweet pinned in the HDFC Bank’s customer care handle.

India’s largest private sector lender, HDFC Bank has the highest share of unsecured retail loans as compared to other entities in the industry.

In response to customer queries, ICICI Bank’s customer care Twitter handle wrote, “Hi, the RBI has announced certain relief measures for the borrowers. We are in the process of implementing it. We will inform you shortly. We appreciate your patience. Take care and stay safe. Regards, Team ICICI Bank.”

Banks’ reassurance

While there is no official announcement yet from private or public sector banks, industry experts believe private banks will be more reluctant to pass on the benefit relief to its customers than their PSU counterparts.

On Friday, news channels quoted State Bank of India Chairman Rajnish Kumar saying: “Instalments will get automatically deferred by three months for term loans and customers don’t have to apply to banks for it.”

But the public sector lenders’ response to customer queries on the three-month moratorium read, “Dear Customer, we understand your concern. Bank will communicate about the same to all the eligible customers suitably.”

However, N Kamakodi, MD & CEO of City Union Bank, said that customers need not worry about procedural things (like board approval) and the three-month moratorium on term loan repayments will happen automatically.

“There is absolutely no question about the implementation (of RBI guidelines). This is a major calamity and nobody knows how long it will take. So, it is a paramount duty of all bankers to take care of the RBI instruction and pass on the benefits to the customers,” Kamakodi said.

He also added that City Union Bank will be sending SMS/E-mail communication to all its customers on this matter.

Published on March 29, 2020

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