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COVID-19 Relief: Loan Moratorium Can be Extended by 2 Years
As a COVID-19 relief measure, the Central Government announced that the moratorium period can be extended by 2 years.
The Central Government recently announced that the moratorium for loans can be extended by up to 2 years. This is the third announcement regarding the extension of the moratorium for loan repayment. It was first announced for three months on 27th March applicable from 1st March 2020 to 31st May 2020 and then extended for three more as announced on 22nd May and applicable from 1st June to 31st August. The moratorium was supposed to provide relief to people facing a cash crunch due to lockdowns.
As per the announcement, the borrower did not have to pay EMIs. And no penal interest (for non-repayment of loan) was charged during the extended moratorium period. Also, it would not affect the credit score of the borrower.
Yet, many financial experts had advised borrowers to repay the loan as per the repayment schedule, if possible. This was because the interest would still accrue on the loan principal and the overall debt burden would increase on the borrower. The option was only supposed to be exercised when loan repayment was not feasible.
Good News
This time, the apex court has asked the Centre to file an affidavit to waive interest entirely during the moratorium.
If this petition follows through then borrowers will not have to worry about the increased debt burden after the end of the moratorium. In that case, availing a loan moratorium will not be a bad idea at all. Whether that is a good thing for banks and the finance industry is another matter for discussion.
What do you think about the extension of the moratorium?
Without second thought moratorium extension should be done I lost job and now starving for food and do not know how to make up my pending rent.
Dear Umashankar,
Thanks for sharing with us your thoughts and your pain. We cannot do anything beyond merely empathising with you right now. And for that we are truly sorry.
That you choose to tell us your reality, reaffirms our belief that we must try to do something more for those who trust us and share their stories and dreams with us.
We have kept your email address and will update you hopefully by end of this month on a way forward we are currently planning.
Stay strong, friend. And remember the truth behind a line we dismiss so easily: The Night is Darkest Before Dawn.
One more thing: You were born to rise. And you will rise. Don’t ever forget that.
With wishes of hope, resoluteness and determination.