In the view of COVID-19 pandemic and ensuing lock down, Reserve Bank of India (RBI) announced that banks need to offer a three-month moratorium on payment of personal loan EMIs. As a result, ICICI Bank announced a 3 month moratorium on payment of personal loan EMIs in case customers opt for it. This moratorium has now been extended for a further period of 3 months till August 31, 2020. In other words, you now have the option to postpone the payment of up to 6 personal loan EMIs with due dates falling between 1st March, 2020 to 31st August, 2020. ICICI Bank will not charge any penalty or fees for such a delay in payment during this period, however, interest on your loan will keep on accumulating during the moratorium period.
COVID-19 Relief Measures by ICICI Bank
ICICI Bank has announced a moratorium on all personal loan EMIs for up to 6 months so that borrowers do not get burdened during the current financial difficulties that might occur due to the current COVID-19 crisis/lockdown. Please note that this personal loan moratorium is optional and you can continue to pay your loan EMIs as normal if you have the funds to continue with your payments.
- If you don’t want to defer the EMI payment of ICICI Bank personal loan, then you need not perform any additional step. You can continue to normally pay your loan EMIs on the designated due dates.
- If you want to defer the EMI payment of ICICI Bank personal loan, then you need to visit the bank website and perform the steps mentioned to opt for moratorium. We have also discussed the step-by-step procedure in the later section of this article, so that you can easily opt for the moratorium.
But do remember that although the moratorium gives you some extra time to pay the loan EMIs, interest on the monthly installments will keep on accruing during the moratorium period. Thus, you should weigh both the additional cost vs. the benefit of additional time before arriving at a decision to opt for the moratorium or not.
Eligibility for Personal Loan EMI Moratorium
All individuals, who have outstanding personal loan with ICICI Bank with EMI due dates falling between 1st March, 2020 and 31st May, 2020 are eligible for the three month moratorium. They can defer the loan EMI payments owing to cash flow restriction amid the Coronavirus disease outbreak. With the extension announced in May by The Reserve Bank of India, this moratorium is now available on all eligible EMI payments till August 31, 2020.
NOTE: Non Resident Individuals (NRIs) are also eligible to avail the moratorium on their personal loan EMIs. They can either click on the link in the e-mail sent by the bank in this respect Or they can visit the bank’s website to apply for the moratorium.
Illustration: What will be the Effect of Moratorium?
For example: Suppose you have taken a personal loan from ICICI Bank with the principal outstanding of Rs. 8 lakh at an interest rate of 18% per annum and residual tenure of 30 months at the time of moratorium. Let’s see how the moratorium will affect your interest payout.
1. If you do not opt for the moratorium:
|Total interest payable for the residual tenure of 2 years and 6 months||Rs. 1.99 lakh|
|Total amount to be paid (Principal + Interest)||Rs. 9.99 lakh|
2. If you opt for the moratorium:
|Extra interest accrued over the moratorium period of 3 months*||Rs. 36,362|
|Interest payable over the residual tenure of 2 years and 6 months**||Rs. 1.99 lakh|
|Total amount to be paid (Principal + Interest + Moratorium period interest)||Rs. 10.36 lakh|
* Extra interest incurred during the moratorium period of 3 months = Rs. 12,000 (Month 1 interest) + Rs, 12,180 (Month 2 interest) + Rs. 12182.70 (Month 3 interest) = Rs. 36, 362
**As a result of the moratorium, your loan tenure will be extended by three months and you still have to pay the interest incurred for the original 2 year 6 month remaining tenure of the loan = Rs. 1,99,330.
NOTE: The above calculation has been done for an illustrative purpose and the actual interest payable may vary from lender to lender.
How to Apply For ICICI Loan Moratorium?
Step 1: Visit the ICICI Bank homepage.
Step 2: Click on “Choose Your Option” link, as shown in the above image. You will be directed to the following page. Carefully read the terms and conditions, and click “Next”.
Step 3: You will be directed to the following page. Add your registered mobile number with the bank and follow the subsequent instructions to opt for the moratorium.
Image Source: ICICI Website
Alternatively, you can click on the link sent by the bank on your registered e-mail ID or mobile number to opt for the deferment of EMI payment during the moratorium period.
Please note that you don’t need to submit any documents to avail the moratorium. The entire process can be completed online by following the above mentioned steps.
How Does Loan EMI Moratorium Work?
The loan moratorium basically means that you are being offered a period of three months to delay the payment of your loan EMIs with the due dates falling between 1st March, 2020 and 31st August, 2020. You should note that the EMI payments are only being deferred and not waived off. The interest will keep on accruing during the moratorium period as per the contracted rate.
Generally an EMI has 2 components, the principal and the interest. While the principal component will remain unaffected during the moratorium period, the interest component will keep on accumulating. As a result, you will have to pay higher interest if you opt for the moratorium.
Thus we advise you to pay the loan EMIs on the designated due dates, if possible to avoid paying excess interest later on.
Some Important Related Terms
What to do if you have opted for auto debit options with respect to your ICICI Bank personal loan EMI payment? Worry not! The bank will not automatically debit the EMI payment on the designated due dates, if you have opted for the moratorium.
Let’s understand the various modes of auto debit available for ICICI Bank personal loan EMI payment.
- Standing Instruction: This means that you allow the bank to automatically deduct the EMI amount from you ICICI Bank account on the designated due dates. As a result, you are saved from both remembering the due dates and also from issuing EMI cheques every month / submitting post-dated cheques. You can opt for this method by filling out a form to activate the mandate.
- National Automated Clearing House (NACH): If you don’t have a bank account with ICICI bank, then you can use NACH. It allows you to pay your personal loan EMIs from your account with any other bank on the respective due dates.
NOTE: You may need to fill out and submit a new mandate to ICICI Bank in case your EMI amount changes after opting for the moratorium.
Frequently Asked Questions (FAQs)
Q1. Is the relief available for ICICI Bank credit card dues also?
Yes, you can opt for the moratorium for your credit card dues as well. However, it should be noted that the rate of interest on credit cards is significantly higher, and hence you may end up paying a relatively larger sum later.
Q2. Should I pay or defer?
We suggest you to not defer your EMI payments, if possible. However, if your income has been severely affected or you want to restrict your cash outflow during the crisis, you may opt for the moratorium. In such a case, do calculate the extra interest that you have to pay on account of taking the 3-month moratorium.
Q3. What is 3 months loan EMI moratorium and the 3 month moratorium extension?
The 3-month loan moratorium means that RBI guidelines implemented by ICICI Bank now allow you to delay the payment of your EMIs with due dates falling between 1st March, 2020 and 31st May, 2020. The extension now allows a similar delay in payments for an additional 3 months from June 1, 2020 to August 31, 2020. No penalty or fees will be charged during this period however the interest will keep on accruing for the entire period.
Q4. What should I do, if I do not want the EMI moratorium?
You need not do anything, if you don’t want to opt for a moratorium with respect to ICICI Bank personal loan. You can continue to pay the EMIs as per the original schedule in such cases.
Q5. Is my credit score affected if I choose to take the personal loan moratorium?
No, your credit rating will not be affected if you opt for the moratorium, as RBI mandated that credit bureaus will not consider the delay in payments during the moratorium period when calculating your credit score.