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EMI Moratorium

EMI Moratorium on Loan Products & Credit Cards

Last Updated 22nd Sep 2021

EMI Moratorium is a facility which allows borrowers to postpone the payment of EMI without impacting their credit score. As a part of relief package for COVID-19, RBI in India has announced a 3-month moratorium on all EMI payments starting from 1st March which has further been extended by 3 months to 31st August 2020.

Details of the current EMI Moratorium as announced in India are:

EMI Moratorium Period 1st March to 31st August 2020
Eligible Loans for Moratorium All EMI based loans and credit cards
Applicability of EMI Voluntary for borrowers
Process to opt for Moratorium Online and Offline
Status This scheme has ended. Now, Banks are instructed to come out with loan restructuring scheme

    Compare EMI Moratorium Scheme for Top Banks

    Bank URL How to opt for EMI Moratorium
    SBI EMI Moratorium https://www.sbi.co.in/ Apply for SBI EMI Moratorium scheme through the standing instruction sent by SMS or visiting the bank website.
    HDFC EMI Moratorium https://www.hdfc.com Opt for HDFC EMI Moratorium scheme by visiting the website or through the link that is sent to you through email and SMS.
    ICICI EMI Moratorium https://www.icicibank.com/ To opt for ICICI Bank EMI Moratorium, visit the bank website or reply to bank communication through SMS and Email.
    BOB EMI Moratorium https://www.bankofbaroda.in/ Opt for BOB EMI Moratorium by sending a mail or by calling the bank.
    Axis Bank EMI Moratorium https://www.axisbank.com/ Customers can opt for the Axis Bank Moratorium Scheme by visiting the bank or through the bank website.

    No extension in EMI moratorium and restructuring of loans announced by RBI

    As per the RBI's announcement, there is no extension on EMI moratorium. However, RBI has announced restructuring of loans under which banks have been allowed to work out a restructuring plan for personal loans as well. Banks will decide on their own to whom to offer this benefit and what will be the new terms and conditions. Also, there is a difference between EMI moratorium and loan restructuring. As per EMI moratorium, the borrower is not required to pay any EMI amount during the moratorium period and the interest accrued during such period will be added to the principal loan amount and interest will be payable on it once the EMI payment starts. However, under the restructuring of loans, banks have the flexibility to decide on the kind of restructuring it wants to offer to their customers. There are many options like reducing EMI amount for a few months, extending the loan tenure, accept the interest on EMIs or adjusting rate of interest etc. Further, RBI statement refers to personal loans, and more clarity is required on whether the new guideline is applicable to all retail loans, including home loan or not.

    What is EMI Moratorium?

    The term EMI Moratorium is the temporary deferment of payment of interest/ principal/ instalments. It means that the borrowers do not need to pay EMI on the loans for the given period. For example, EMI moratorium is one of the features on education loan in which borrower is allowed to start paying the EMI within a year of completing his course or when he gets a job after completing his education, whichever is earlier.

    EMI Moratorium may also be offered as a special package to provide relief to borrowers in case of economy wide distress like the current COVID-19 pandemic.
    To provide relief to the borrowers amid COVID pandemic, RBI announced EMI Moratorium on all the loan products and credit card facilities. Borrowers can voluntarily opt for the Moratorium scheme for the period starting from March 1, 2020, till August 31 2020.

    A moratorium is available for different payments:

    • Principal and Interest Component product of Loan
    • EMI (Equated Monthly Installments) on Loan
    • Credit Card Dues

    Loan Moratorium Update on 3rd Oct, 2020: Borrowers may get interest waiver on all loans upto Rs. 2 Crores

    The current pandemic has given rise to unprecedented financial obstacles and to help borrowers deal with the same, the Supreme Court in its judgement provided significant relief to the loan borrowers by providing monetary relief up to Rs. 80,000 for MSME and other loans. These relaxations are applicable to all individuals and entities whose loan amount is below Rs. 2 Crore during the moratorium period. Earlier, as per the regulations of RBI, all the banks offered moratorium to its loan borrowers starting from March 1, 2020 and continuing up to May 31, 2020. The banks further extended the moratorium period for three months, dating from June 1, 2020, to August 31, 2020.

    The compounding interest on the loans will be waived for the specified period as mentioned above for the most vulnerable category of the borrowers, said the judgment, the details for which are yet to be clear. The category of loans on which borrowers can get monetary relief are MSME Loans, Education Loans, Housing Loans, Consumer Durable Loans, Auto Loans, Personal Loans to professionals, Credit Card Dues and Consumption Loan.

    How will it impact borrowers?

    This move will impact about 80% of the loan under the moratorium. If a borrower has availed a loan of amount Rs. 2 Crores, he/she can get relief up to Rs. 80,000 and for a loan amount of Rs. 50 lakhs they are eligible for monetary relief of upto Rs. 20,000. This indicates that the borrowers can get grants as much as 25% of the loan amount, which would be a big relief to all the borrowers.

    Will it affect the lending institutions?

    While all the lending institutions allowed the borrowers to postpone their EMI under the moratorium relief, the interest was still charged on the loan which was to be paid after the moratorium period. However, in a plea seeking for extension of loan moratorium, it was also submitted that the interest is waived off as it affected borrowers. It was proposed that there was no merit in charging interest on interest as it would fail the purpose of moratorium relief.

    Thus as per the judgement announced, no interest will be charged on the interest which would indeed help borrowers without putting much burden on the lending institutions. The burden for the same will be borne by the government, which is expected to be approximately around 5000 to 7000 Crore.

    The modalities for the relief measure is yet to be figured out in the coming time. For instance, there are a lot of uncertainties regarding how it will be implemented. Along with that, the bigger question is what will happen to the loan accounts that have already been debited for this amount or the accounts which have been fully repaid. Also, the lending institutions have yet not said much about the relief measure as the details for the implementation are yet to be awaited.

    EMI Moratorium on Loan Products

    You can opt for latest RBI announced EMI Moratorium Scheme on all loan products such as Car Loan, Personal Loan, Home Loan, Business Loan etc. However, remember that the bank will still charge interest on outstanding loan for the period of moratorium. Further, the total interest will be higher than what you would have paid in the original loan tenure as you are not repaying any loan during the moratorium period and hence, the loan tenure increases by the moratorium months. One needs to understand that EMI Moratorium is not EMI Waiver and hence, all outstanding dues along with additional interest during the moratorium must be repaid to the bank after the moratorium period ends.

    EMI Moratorium has been announced to provide temporary relief to borrowers in case they are facing any sort of financial distress due of loss of job, salary cuts or additional medical expenses. Hence, it is advisable to opt for moratorium only if you have a genuine cash crunch otherwise you may just end up paying additional interest.

    EMI Moratorium on Home Loans

    Home loan borrowers who opt for 6 months EMI moratorium will not have to pay EMI on home loan from 1st March 2020 to 31st May 2020. Thus, it will reduce the cash outflow in the moratorium period if they are facing a cash crunch. Currently, the lowest EMI per lakh on home loans is ₹ 3,620 at 6.50% for 30 years respectively. However, as the home loan is a long-term commitment, you must choose moratorium on home loans if it is absolutely necessary as it will increase the burden of home loan amount and tenure if the home loan amount is significant.

    EMI Moratorium on Personal Loans

    RBI allowed all financial institutions to offer a moratorium of three months on the repayment of personal loans from 1st March 2020, which was further extended till 31st August 2020. You can opt for EMI moratorium on personal loans if you are facing a financial crisis due to income flow. Currently, the lowest interest rate and EMI per lakh on personal loans is 10.25% and ₹ 1,673 for a maximum tenure of 84 months. Thus, opting for moratorium can reduce the outflow of cash in the moratorium period.

    EMI Moratorium on Car Loans

    A car loan is availed for a maximum tenure of 8 years. If you opt-for EMI moratorium on the car loan, you would not have to face huge costs of accrued interest on your loans. However, you must opt for moratorium only if your income sources are affected severely. Currently, the lowest EMI per lakh on car loans is ₹ 14,597 at a rate of 6.50% for a maximum tenure of 7 years.

    EMI Moratorium on Credit Card

    The Moratorium relief measure announced as part of a relief package by RBI is also applicable on credit card dues. It is available for the months of March, April, May, June, July and August. However, credit card being a high interest rate product, the interest that gets accrued for the six months will mean a significant cost for the borrower.

    If you defer your credit card payment, then usually the outstanding amount is carried forward to the next billing cycle as you pay the minimum due amount. Banks charge about 2%-4% interest rate on the postponement of credit card dues.

    It is advisable to opt for Credit Card EMI moratorium only if you are facing genuine and extreme cash crunch on your monthly budget due to a pay cut or loss in business or job loss.

    How does EMI Moratorium work?

    EMI Moratorium works by allowing customers to defer their EMIs due on loan which in the current scheme announced by RBI is for a period starting from March 1, 2020, to August 31, 2020. The banks will, however, charge interest on the loan amount outstanding for these six months. At the end of the moratorium period, borrowers have the option to either pay the deferred EMIs with additional interest as one-time payment or opt to pay higher EMIs over the loan tenure or opt to pay the same EMI over a longer loan tenure. Different banks have provided various methods to pay an outstanding amount which gets accrued. For instance, some banks have provided the facility to increase tenure of the loan; however, the EMI amount on loan will remain the same as earlier.

    Different options if borrowers opt for EMI Moratorium

    If you choose the moratorium on EMI payments, banks are likely to give you three options.

    • Option 1: Make a one-time payment for the Interest and Principal Amount accrued at the end of six months.
    • Option 2: Accumulated interest will be added to the outstanding principal amount, and the borrowers will need to pay more EMI amount every month without increasing the loan tenure.
    • Option 3: The outstanding amount along with additional interest can be paid for a longer tenure without changing the amount of EMI that the borrower was paying before moratorium.

    Can borrowers decide not to opt for EMI Moratorium?

    EMI Moratorium facility, as announced by RBI, is a voluntary scheme if the borrowers are struggling with the liquidity crisis. If the borrower does not apply for the Moratorium, he will be expected to continue paying the EMI as before.

    How to opt for EMI Moratorium from different Banks?

    Most of the banks are sending out SMS and Emails to their customers to know if they want to opt for moratorium scheme on loans and credit card dues. However, in case you haven’t received any communication from the bank, you can also contact your bank either online or offline to apply for Moratorium. Moratorium will not be applicable automatically and hence, don’t stop paying your EMI unless you have communicated your decision to opt to the bank and received a confirmation on the same. Any delay in EMI payment without bank confirmation, might impact your credit score adversely.

    HDFC EMI Moratorium

    To provide relief to the borrowers, HDFC has provided an option for Moratorium on all loan products and credit cards. You can apply for HDFC EMI Moratorium through offline and online modes.

    • Opting for EMI Moratorium through offline mode: HDFC has sent an SMS to its customers with a link to apply for the Moratorium Scheme. You can click on this link and choose for EMI Moratorium.
    • Opting for EMI Moratorium Online: Visit the official website of HDFC and click on the option to choose EMI Moratorium. Now, fill in the application form by submitting details such as First and Last Name, Date of Birth, Registered Mobile Number, Email ID, Loan Product, Loan Account Number and EMI amount.

    ICICI Bank EMI Moratorium

    You can apply for ICICI EMI Moratorium for the month of July before June 24, 2020. To apply for the Moratorium for the month of July and August, you need to re-opt for the scheme on all loan products and credit cards.

    • Opting for EMI Moratorium through Offline Mode: ICICI Bank has sent an SMS and Email to its customers with a link to apply for the Moratorium Scheme. Customers can click on this link and opt for EMI Moratorium.
    • Opting for EMI Moratorium Online: To apply for the EMI Moratorium, you need to follow the below-mentioned procedures.
      • Visit the official website of ICICI Bank.
      • Now, on the homepage click on 'Apply here for Moratorium for June 2020'.
      • On the next page, read all the terms and conditions and click on Opt for Moratorium.
      • Now, enter your registered number.
      • On the next page, submit details like PAN, Date of Birth etc. It will take you to a new page. Now follow all the instructions as mentioned.

    SBI EMI Moratorium

    SBI Bank is providing EMI Moratorium facility on all loan products and credit card dues for six months. You can opt for the moratorium as per your convenience and requirements.

    • Opting for EMI Moratorium through offline mode: SBI has sent an SMS to its customers for opting for EMI Moratorium. If the borrowers want to opt for the deferment scheme, they can send Reply to VMN within 5 days from the receipt of SMS. However, the customers will receive the SMS if their mobile number is registered with the Bank. In such cases, they can either visit the Bank or call the Bank.
    • Opting for EMI Moratorium Online: You can also apply for EMI Moratorium scheme through Email. As you visit the official website of SBI, you will find ‘Notice: COVID-19 Relief Measures – EMI Deferment’ listed under ‘Announcements’. Now, click on ‘Annexure – I’ and download the application form. Submit this application form and send it through your Email Id.

    Bank of Baroda EMI Moratorium

    The bank introduced an 'Opt-out' policy, which means that moratorium was provided by default to borrowers and those who wish to repay need to contact the bank. It is providing EMI moratorium benefit to all customers who have an outstanding amount up to Rs 10 Lakhs on all term loans and working capital Limit as on 31st March 2020. Customers who have an outstanding amount more than Rs. 10 Lakh need to contact at the Base branch for availing Moratorium.

    Axis Bank EMI Moratorium

    Axis Bank has provided deferment for all loan products including schemes such as Retail Microfinance Kisan Credit Card (KCC) & Farmer Loans (Cash Credit & Overdraft) and on credit card dues as well.

    • Opting for EMI Moratorium through offline mode: Customers can opt for the Moratorium Scheme by visiting the Bank or calling the Bank branch.
    • Opting for EMI Moratorium through online mode: You can opt for the deferment for the loan payment by visiting the official website of Axis Bank.

    Here is a step-by-step guide to opt for EMI Moratorium:

    • On the right side of the homepage, click on Know More under Opt for Moratorium/Deferment.
    • On the next page, click on Opt Now on the bottom of the screen.
    • Now, provide consent for the deferment by providing the registered Mobile Number and Captcha Code and click on the Submit button.
    • Provide the OTP sent to your mobile number.
    • Finally, select the Loan Product/Credit Card and Customer Id and click on Submit Button.


    What charges will I pay if I avail of this EMI Moratorium?

    If you opt for the EMI Moratorium, you have additional interest for three months on the outstanding loan amount for the Moratorium period. However, banks will not charge any additional penalty fees/ charges if you avail EMI Moratorium.

    Is interest paid during the moratorium period?

    Yes, interest will get accrued for the Moratorium period. You will have to pay the accrued interest after the Moratorium period as per the process laid down by the respective bank’s guidelines.

    Should I opt for EMI Moratorium?

    RBI has introduced the Moratorium scheme if your sources of income are affected in the lockdown period. If you have a regular source of income and don’t find any difficulty in paying the EMI, you must not opt for the Moratorium scheme as banks will charge interest on the outstanding amount during the Moratorium period.

    Do I need to submit any documents for opting EMI Moratorium?

    No, you don’t need to submit any additional documents for opting EMI Moratorium. To opt for the deferment of your payments, you just need to provide the application form for consent through online or offline modes such as through the bank website or SMS communication.

    How can I get an EMI Moratorium?

    Banks are actively contacting you for providing your consent for opting for EMI Moratorium through call and SMS communication. You can also opt for the deferment of your payments by visiting the Bank’s official website.

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