If the borrower does not want to defer EMIs, there is no action required and the EMI payment will continue as usual.
SBI home loan: For the borrowers of SBI home loan, auto loan and personal loan, who wish to avail the benefit of the RBI’s moratorium scheme, the finer details and the process to apply have been announced by the bank. SBI has taken steps to ensure that the loan installments and the interest or EMIs on Term Loans falling due between 01.03.2020 and 31.05.2020 are deferred according to the terms of RBI COVID 19 regulatory package.
According to SBI, for the borrower who wishes to defer the EMIs, the total repayment period will be extended by 3 months over the original repayment period. Also, if the borrower does not want to defer instalments or EMIs, there is no action required and the EMI payment will continue as usual.
Borrowers who wish to defer EMI
NACH – If your EMI is being paid through National Automated Clearing House (NACH), you will have to submit an Application (Annexure-I) along with mandate for NACH Extension – (Annexure-II) to stop NACH for these instalments through an e-mail to the specified email ID (Annexure-III).
Standing Instructions (SI) – If your EMI is being paid through SI, you need to submit an Application (Annexure-I) through an email to the specified email ID (Annexure-III)
EMI already deducted
There could be an instance, your EMI has already been deducted from your bank account. In such a case, the borrower can ask for a refund of the EMI already paid by submitting an Application (Annexure-I) through an email to the specified mail ID (Annexure-III)
The SBI through its communication has informed that effecting deferment of EMI/NACH/Refund may take approximately 7 working days. One can download the Application form and the relevant Annexure from the SBI website.
But, before you think of deferring the EMI payment, here’s an example as provided by SBI.
Impact in case of Auto Loan – For a loan of Rs.6 lakh with a remaining maturity of 54 months the additional interest payable would be Rs.19,000 approximately equal to an additional 1.5 EMIs.
Impact in case of Home Loan – For a loan of Rs.30 lakh with a remaining maturity of 15 years, the net additional interest would be approx. Rs 2.34 lakh equal to 8 EMIs.
It’s important to note that interest will continue to accrue on the outstanding portion of the Term Loan during the moratorium period. This means, the tenure will get extended because of the interest portion of the deferred EMI that will continue to accumulate.
Should I pay or defer?
If you are hard-pressed for cash in the Covid 19 situation, one may take advantage of the moratorium. Thereafter, as soon as the financial position improves, it’s better to repay rather than wait to repay the 3 EMI installments at the end of the tenure. The lower the home loan tenure, the better it is to defer and if the tenure is long, better to prepay if one goes for deferment. The idea of the moratorium package is to help borrowers help tide over the financial crunch that they may face because of the impact of Coronavirus pandemic.