Three-month moratorium on EMI payments offered by banks is unlikely to bring much relief to borrowers hit by COVID-19 lockdowns as they will have to bear the extra cost of interest charged by lenders and a longer repayment period, according to experts.
Experts feel that the three-month moratorium on repayment on loans to help people fight the impact of coronavirus seems to be benefiting banks rather than borrowers as they will have to pay accumulated interest through increased number of EMIs.
It is an expensive proposition for any borrower to opt for three-month suspension as announced by the RBI under the relief measures to mitigate the hardship of those hit by the outbreak of COVID-19 pandemic.
Last Friday, the RBI had announced that all term loans, including retail and crop loans and working capital payments, will be covered by the three-month moratorium. Banks will now have discretion in deciding the limits on working capital, with the RBI saying that no payment miss should be considered a default and reported to credit information companies.
