One will be required to pay additional interest of 0.35 per cent per annum over and above the current pricing for the remaining tenure of the loan.
SBI EMI Moratorium Latest News: The tenure of the loan can be extended only up to maximum of 24 months for COVID-19 related financial stress.
SBI EMI Moratorium Extension News: The RBI’s EMI moratorium was available to the borrowers for six months ending August 31. Now the restructuring is available to the borrowers. Under this restructuring framework, the moratorium will be in addition to the moratorium granted by the banks earlier. During the moratorium period, the EMIs were not required to be paid by the borrowers. However, still, there are several borrowers who are finding it difficult to pay EMI on their home loan, personal loan, car loan or in making credit card payments. The good news is that such borrowers can approach their lender or the banker for the restructuring of their loans.
State Bank of India (SBI) has already come out with a restructuring policy under which the loan can be rescheduled and the moratorium can be further extended for a period of 24 months. As far as the EMI moratorium is concerned, the borrower may get the moratorium for a period of up to a maximum of 24 months. The instalments will get rescheduled and the extension of tenure will be for a period equivalent to the moratorium granted subject to a maximum of 2 years.
During the moratorium or the restructuring, the borrower need not pay EMIs on the loan, however, the interest will be applied during the Moratorium period. If one has to opt for the EMI moratorium but still want to keep the interest burden lower over the 2-year moratorium period, it is better to keep paying as and when one has funds. Any surplus cash during moratorium can be paid back to keep interest cost lower.
EMI Extension period
The moratorium period is based on the type of loan of the borrower such as personal loan, home loan or credit card. For example, in case of home loan, the tenure of the loan can be extended up to a maximum of 24 months or till the borrower attains 77 years of age, whichever is earlier. In any case, the tenure of the loan can be extended only up to a maximum of 24 months for COVID-19 related financial stress.
Interest rate calculation
Once one opts for the moratorium, the EMI calculation will be done again. If the moratorium is approved, the loan tenure will be extended by the period of the moratorium and the EMI payable after the moratorium will be recalculated by the bank.
And, not just the re-calculation of EMI, there be a change in pricing of the loan. One will be required to pay additional interest of 0.35 per cent per annum over and above the current pricing for the remaining tenure of the loan. This is in order to offset the partial cost of additional provisions required to be made by the Bank. There is, however, no processing fee being charged by the bank.