In order to mitigate the financial effects resulting from COVID-19 related health crisis and the lockdown, RBI has permitted all banks and financial institutions of India to offer their customers a 3-month moratorium plus a 3 month moratorium extension on all term loans, including personal loans. As per this directive, SBI has offered its personal loan account holders a moratorium of up to 6 months on EMI payments due between 1st March 2020 to 31st August 2020. Some key aspects relating to SBI Personal Loan Moratorium including the eligibility criteria, application process, etc. are discussed below:
What is SBI Personal Loan Moratorium
RBI has allowed all banks and financial institutions to offer a total 6 month moratorium on all term loans, including personal loans, as a temporary relief measure for those who are severely impacted by the lockdown and the health crisis resulting from the COVID-19 pandemic. The moratorium legally allows the borrowers to defer the payments of their personal loan EMIs for up to 6 months with the due dates falling between 1st March, 2020 and 31st August, 2020. Such a delay will neither be chargeable nor penalized. However, interest will keep accruing during this period. SBI Personal Loan Moratorium thus, enables customers to postpone the payment of their personal loan EMIs falling due between this period by extending the original repayment period by up to 6 months.
COVID-19 Relief Measures from SBI
As per RBI COVID-19 regulatory package, SBI has taken steps to enable customers to defer the payment of EMIs/ interest payable on its personal loans falling due between 1st March, 2020 and 31st August, 2020. SBI personal loan moratorium enables customers to defer the payment of their personal loan EMIs by up to 6 months without incurring late payment charges or impact to their credit score. As a relief measure, SBI offers its personal loan account holders the option to opt for the moratorium in any of the following 3 cases and along with the procedure required in each case:
|Options available to Borrowers||Course of Action|
|1. Customer who do not want to defer recovery of installments /EMI||No action required. Customers may continue to pay in usual course.|
|2. Customer who wants to defer recovery of installments/EMI||● NACH: Where EMI payments were made through National Automated Clearing House (NACH), customers must submit an Application (Annexure-I) through an e-mail to the specified email ID (Annexure-II). In case they are unable to submit the same via email, a handwritten application can also be submitted in the same format to the home branch.|
● Standing Instructions (SI): Kindly submit an application (Annexure-I) via an email to the specified email ID (Annexure-II). In case you are unable to do so, you can submit a handwritten application in the same format to the home branch.
|3. Customers who want refund of the instalment/EMI already paid||Submit an Application (Annexure-I) via an email to the specified mail ID (Annexure-II) or a handwritten application in the same format to the home branch.|
Eligibility for Personal Loan EMI Moratorium
There is no particular eligibility criteria required to avail the benefits of personal loan EMI moratorium. The deferment benefits are available on all term loans including personal loans. The extended 3 month moratorium starting in June can be availed even by those who have already opted for the initial 3 month moratorium during the March to May period.
The following example is designed to illustrate how your loan payment amount is impacted if you opt for the SBI personal loan moratorium. Suppose you have an outstanding loan of Rs. 6 lakh at 12% p.a. interest rate with an outstanding tenure of 4 years at the time of the loan moratorium:
1. If you do not opt for the moratorium:
|Total interest payable for 4 year tenure||Rs. 1.58 lakh|
|Total amount to be repaid (Principal + Interest)||Rs. 7.58 lakh|
2. If you do opt for the moratorium:
|Extra interest incurred during the moratorium period of 3 months*||Rs. 18,181|
|Interest payable over the remainder of the loan tenure (4 years)**||Rs. 1.58 lakh|
|Total amount to be repaid (Principal + Interest + 3 month moratorium period interest)||Rs. 7.76 lakh|
Note: * Extra interest incurred during the moratorium period of 3 months = 6000 (Month 1 interest) + 6060 (Month 2 interest) + 6121 (Month 3 interest) = Rs. 18,181.
** 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 4 year tenure remaining on the loan = Rs. 1.58 Lakh.
***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 case you have to pay an additional Rs. 18,181 in interest charges just for taking the 3 month moratorium on your SBI personal loan. This amount will be much greater if your loan amount and/or interest rate are higher. In short if you opt for this loan moratorium, your overall cost of borrowing will go up.
How to apply for SBI Loan Moratorium
Customers can apply for SBI Personal Loan Moratorium via any of the following ways given below:
a). Via Email: To apply for moratorium via email simply follow the steps given below:
- Visit the official website of SBI.
- Click on ‘Notice: COVID-19 Relief Measures – EMI Deferment’ listed under ‘Announcements’.
- On the page that opens next, click on ‘Annexure – I’ to download the application form for the deferment of EMI (Installment) or the refund of EMI (Installment) already paid.
- Fill in the required information and send the same via email to the concerned branch authorities.
Note: The state/union territory specific branch email ids are listed below in Annexure-II.
b). Submitting a Handwritten Application to the Home Branch: In case you are unable to request for the deferment of EMI or the refund of EMI already paid via email, you can submit a handwritten application in the same format to the home branch.
Moratorium Related Forms/ Annexure
To defer SBI personal loan EMI payments or to get a refund of the EMI(s) already paid customers need to download the form in ‘Annexure – I’ and send the same via email or submit a handwritten application in the same format to the home branch.
Annexure – II: The state/union territory specific branch email ids are listed below:
Some Important related terms
Some key terms relating to SBI personal loan moratorium are given below:
- Standing Instructions (SI): Standing instructions refer to an order to an organisation/bank to make payments on your behalf to another person/bank/institution. In case of personal loan EMI payments, it involves automatically deducting the monthly EMI amount from your account and depositing the same into the lender’s account every month.
- NACH: NACH stands for National Automated Clearing House. It is an online funds trafer platform that helps facilitate high volume, interbank, electronic transactions for use by banks and other financial institutions. It is particularly helpful for clearing bulk and repetitive transactions that take place amongst banks such as personal loan EMI payments.
Q1. What should be done in case I do not wish to opt for deferment of my EMI payments?
In case you do not wish to opt for EMI moratorium, no action is required from your end. You can continue to pay as per the original repayment schedule.
Q2. Is EMI moratorium applicable on all term loans?
Yes, the moratorium benefits are available on all term loans including car loan, education loan, SBI personal loans, etc.
Q3. Does moratorium mean waiving of EMIs?
No. EMIs are only postponed/deferred and not waived. Once the moratorium period is over, that is, 1st June 2020 onwards, customers have to start paying their loan EMIs as per the original.
Q4. Can I avail the moratorium benefits in case I have more than one loan account?
Yes, you can avail moratorium benefits on all State Bank of India loan accounts. However, interest charges will be calculated separately for each loan account and you will have to submit separate EMI moratorium request for each of your loan accounts.
Q4. Will the deferment adversely affect my credit score or credit report?
No, the deferment will not impact your credit score as any missed payments during the moratorium will not be considered as per RBI mandate.