The Central Government in coordination with State Governments have imposed a lockdown across the country in order to contain the spread of the Covid-19 virus. This has impacted the livelihoods of our customers across various segments. RBI, in its notification dated 27th March 2020 (Ref: RBI/2019-20/186), has permitted Housing Finance Companies to offer a “COVID19 moratorium of 3 months on payment of all instalments falling due between Mar 1, 2020 and May 31, 2020”.
In the above context, we are offering the following COVID19 Moratorium Program to our customers. The key terms of this program are as follows:
- All salaried and self-employed individual and non-individual borrowers (including proprietorships, partnership firms and private limited companies) across all products having outstanding loans as of 1st Mar 2020 will be eligible for the COVID19 Moratorium Program
- Moratorium is available on payment of instalments falling due between 1st Mar 2020 and 31st May 2020. If a payment was due prior to 1st March 2020, moratorium is not available on them. [Note: The past due days on payments that were overdue on 1st March 2020 will continue to move up.]
- The customer has to provide his/her consent for the COVID19 moratorium and related repayment plan. Click here for consent form
- Customers who have requested for the moratorium but want to clear their EMIs for April/May can do so by sending a request to cancel their COVID19 moratorium application. Click here for cancellation form
- Customers who have cleared their March and April EMIs can opt for the COVID19 Moratorium Program for May EMI.
Mechanics of the program and impact on customer:
[For purpose of discussion, we will refer to a sample customer transaction:
Loan Amount: Rs. 10 Lakhs
EMI: Rs. 12,074
Original loan tenure: 240 months
Balance loan tenure: 200 months (starting from April, 2020 and ending in Nov, 2036)
The customer has already cleared his 4th March EMI]
The above customer will pay an EMI of Rs 12,074 on 4th April and 4th May in the normal course. These EMIs consist of interest component of Rs 10,784 and Rs 10,770 and principal component of Rs 1,291 and Rs 1,305 respectively. However, we propose to offer a COVID19 Moratorium Program
- Under this program, customer will not pay any EMI/Interest in April and May.
- Customer will resume paying his monthly EMI from 4th June 2020. This will have respective break up of interest and principal. (Principal repayment will continue from June 2020)
- Since we have not recovered any principal from the customer in April and May, this will result in pushing out the maturity of the loan by 2 months. Customer’s balance tenure of 200 months will now start from June 2020 and end in Jan 2037.
- This still leaves us with the interest for Apr and May to be recovered. This amount (Rs 10,784 + Rs 10,770) is equal to Rs 21,554.
- At Home First, we propose to give customers 2 options to pay this back.
- Rs 21,554 to be paid back in 6 equal instalments along with interest on this amount at the same rate of interest as the parent loan (Additional amount of Rs 3,798 in addition to regular EMI of Rs 12,074 starting from June 2020). Repayment of additional amount will also start from 4th June 2020
- Rs 21,554 to be paid back in 12 equal instalments along with interest on this amount at the same rate of interest as the parent loan (Additional amount of Rs 1,963 in addition to regular EMI of Rs 12,074 starting from June 2020). Repayment of additional amount will also start from 4th June 2020
- In the above example, if the customer has not paid the EMI for 4th March, 2020 and wants to opt for postponement of all 3 EMIs (Mar, Apr and May), then the interest component of 4th March EMI also will get added to the total interest recoverable in 6/12 months.
The banks and other financial institutions have been permitted by RBI to give borrowers a grace period of three months (March, April & May) for payment of EMIs. RBI’s moratorium is just a temporary relief on the immediate obligation of the EMIs and NOT a waiver of the payment. Also, nonpayment of the EMI will attract an added interest burden on you. Therefore, the smarter thing to do here is to pay your EMIs on time as per the schedule if you can afford to. Please opt-in for the moratorium only if you’re facing a huge cash flow issue due to COVID-19!
Moratorium refers to the period during which you do not have to pay an EMI on the loan taken. These EMIs are NOT waived off. The collection of the same is postponed by some time. In this case, it’s 3 months.
The moratorium was announced on 27th March, for the installments which were due between 1st March to 31st May 2020. If you have already paid you March EMI as per your schedule, you can opt-in to postpone the payment of April & May EMIs (Due on 4th April and 4th May). Again, only choose this if you are severely affected by the pandemic.
We have the following options for you to pay the 2 postponed EMIs:
a) You can pay the 2 months interest in 6 equal installments in addition to your regular EMIs starting from June 2020. Interest will be charged at your existing ROI.
b) You can pay the 2 months interest in 12 equal installments in addition to your regular EMIs starting from June 2020. Interest will be charged at your existing ROI.
The answer is YES! If you choose to postpone your EMIs by 2 months, your existing loan tenure would get extended by 2 months.
At this stage, we are not in a position to consider any reduction in the rate of interest.
Glad you asked. No! Bounce charges or penalty charges will not be applicable up to 31st May 2020.
Due to lockdown, we will be unable to collect cash. However, you can directly deposit cash in our bank account as soon as you can travel to the bank.
Our branches are temporarily closed for service but we are available on email, WhatsApp and phone. You can also download our app for accessing your account details and query resolution. Please use our mobile app to make your payment.
If you are overdue on your payments before 1st Mar 2020, then you are liable to pay them as soon as possible. A moratorium is not applicable to payments that were due before 1st Mar 2020.
If this happens, your account will go into default! This is why we are encouraging regular EMI payments if possible.