In March 2020, RBI announced certain regulatory measures to minimize the impact of income disruptions brought about by the current COVID-19 related health crisis and the resultant lockdown. As part of its regulatory package and to mitigate the debt-servicing burden of the borrowers, it has permitted all banks and financial institutions of India to offer their customers a 3-month moratorium on all term loans including personal loans. According to RBI’s directive, Kotak Mahindra Bank has offered its personal loan account holders the option to avail moratorium of up to 3 months on personal loan EMI payments due between 1st March 2020 to 31st May 2020. Key details pertaining to Kotak Mahindra Personal Loan Moratorium such as the eligibility criteria, ways to apply for a moratorium, etc. are as follows:
What is Kotak Mahindra Bank Personal Loan Moratorium
As per RBI’s directive, Kotak Mahindra Bank has offered customers the option to opt for a 3-month moratorium on all term loans, including personal loans. The moratorium legally allows the borrowers to postpone payments of their personal loan EMIs for the next 3 months with due dates falling between 1st March, 2020 and 31st May, 2020. Such deferment is neither chargeable nor liable to be penalised. However, interest on the outstanding personal loan principal shall continue to accrue during this period.
COVID-19 Relief Measures from Kotak Mahindra Bank
Opting for a moratorium on loan EMIs payable to Kotak Mahindra Bank is voluntary. No action is needed in case the borrower decides to continue paying his/her personal loan EMIs as per the original schedule. In case the customer’s EMI payment instruments (post-dated cheques/ ECS/ NACH mandates etc.) sent for collection by the bank during 1st March to 31st May 2020 are not cleared, the customer would then be deemed to have opted for the moratorium automatically and no penalties will be charged. In case you choose to opt for EMI Moratorium on your Kotak Mahindra personal loan, Kotak Mahindra Bank offers the following relief measures:
- Borrowers can postpone the payment of their Kotak Mahindra Bank personal loan EMIs (including the principal and interest) for up to 3 months till 31st May, 2020
- Interest shall continue to accrue throughout the moratorium period at the contracted interest rate of the loan
- The personal loan repayment tenure would also get extended by the corresponding period for which you have availed the moratorium. For example, you have paid your personal loan EMIs for March and April 2020 and opted for a moratorium for May, 2020, your original loan repayment tenure would extend by 1 month beyond the original end date of the outstanding loan
Eligibility for Personal Loan EMI Moratorium
The following are key eligibility criteria for loan EMI moratorium as mentioned by Kotak Mahindra Bank:
- All credit facilities granted and disbursed by Kotak Mahindra Bank and outstanding as on 31st March, 2020 are eligible for EMI Moratorium.
- The deferment benefits are available across all term loans, including personal loans and for loan repayment tenures.
- In case the personal loan account was in default prior to 1st March 2020, you may still apply for the loan moratorium however, decision to allow it will be at the discretion of Kotak Mahindra Bank
The following example illustrates how your loan payment amount will be impacted if you opt for a moratorium on your Kotak Mahindra Bank personal loan. For instance, if you have an outstanding loan amount of Rs. 5 lakh at 15% p.a. interest rate with an outstanding loan tenure of 2 years at the time of the loan moratorium:
1. If you do not opt for the moratorium:
|Total interest payable for 2 year tenure||Rs. 81,840|
|Total amount to be repaid (Principal + Interest)||Rs. 5,81,840|
2. If you do opt for the moratorium:
|Extra interest incurred during the moratorium period of 3 months*||Rs. 18,985|
|Interest payable over the remainder of the loan tenure (2 years)**||Rs. 81,840|
|Total amount to be repaid (Principal + Interest + 3 month moratorium period interest)||Rs. 6,00,825|
Note: * Extra interest incurred during the moratorium period of 3 months = 6,250 (Month 1 interest) + 6,328 (Month 2 interest) + 6,407 (Month 3 interest) = Rs. 18,985.
** As your loan tenure will be extended by 3 months as a result of the moratorium you still have to pay the interest incurred for the original 2 year tenure remaining on the loan = Rs. 81,840.
***Please note that the above example is for illustrative purposes only and actual values/calculation method may vary from lender to lender.
Thus, in the above illustrative example, the borrower has to pay an additional Rs.18,985 as interest charges just for taking the 3 month moratorium on the Kotak Mahindra personal loan. This accrued interest will of course be greater if your loan amount and/or interest rate are higher. To sum up, in case you opt for the loan moratorium, your overall cost of borrowing will increase.
Also Know About: Personal Loan Moratorium Interest Calculator
How to Apply for Kotak Mahindra Bank Personal Loan Moratorium?
You can apply for Kotak Mahindra Bank personal loan moratorium via any of the following methods given below:
- Through e-Mail or SMS Link: You can opt for the moratorium by clicking on the email or SMS link sent to your registered email address/mobile number (as per bank records) and filling out the relevant details.
- By Sending e-Mail to Bank: You can also apply for moratorium by sending an email from your registered email id to firstname.lastname@example.org quoting your APAC number/ Loan account number.
- Through Bank Website: Go to the on the Kotak Mahindra Bank website and enter your registered mobile number and Date of Birth/CRN (Customer Relationship Number) to verify your details and opt in for EMI Moratorium online.
Q1. What should I do in case I do not wish to opt for EMI Moratorium?
In case you do not wish to avail EMI Moratorium, no action is required from your end. You can continue to make EMI payments as per your original repayment schedule.
Q2. Does opting for EMI Moratorium have an impact on my credit score?
No, opting for EMI Moratorium will not impact your credit score. Payments deferred during the moratorium period will not get reported to credit bureaus.
Q3. What will happen once the moratorium period ends?
You will have to pay your EMIs as per the contracted schedule after the moratorium period ends. Failure to do so may result in penalties as per the clause of missed payment details stated in your loan agreement.
Q4. I have already made the EMI payments due on my Kotak Mahindra personal loan for the month of March and April. Is it possible to opt for EMI moratorium for the next 1 month?
Yes. You can opt for EMI moratorium for only 1 month instead of all 3 months. However, interest will accrue for the next 1 month which will add to the cost of your loan interest payable.
Q5. What are the charges in case I wish to opt for the moratorium?
Currently there are no charges if you opt for the loan moratorium. That said interest shall continue to accrue on the outstanding loan principal during the moratorium period which will add to the total cost of your loan. This extra interest along with the extended loan repayment period can significantly increase your cost of borrowing.