SBI's 3-Month Loan EMI Moratorium: All You Need To Know

As part of its many economic measures to help citizens during the COVID-19 pandemic, the Reserve Bank of India (RBI) has permitted lending institutions including commercial banks, regional rural banks, small finance banks, co-operative banks, financial institutions, NBFCs (like housing finance companies and micro-finance institutions) ("lending institutions") to allow a moratorium of three months on payment of instalments on term loans outstanding as on 1 March 2020.

The central bank said that the payments due will include:
(i) principal and/or interest component

(ii) bullet repayment

(iii) Equated Monthly instalments

(iv) credit card dues

Starting 31 March, most lenders, especially public sector banks have issued the details on the moratorium facilities.

State Bank of India (SBI), the largest bank in the country, has also issued a notice on its COVID-19 measures, in line with RBI's announcements. The lender has given its customers the choice to opt-in or out of the moratorium, based on their needs, for instalments and interest/EMIs on Term Loans falling due between 1 March 2020 to 31 May 2020.

If you an SBI customer and

Do not want to defer your installments/EMI:

There is no action required. Existing standing instructions (SI) to debit the EMI every month, it will continue till you intimate SBI.

you want to defer recovery of instalments/EMI:

• NACH - Where collections of such instalment / EMI is effected through National Automated Clearing House (NACH), submit an Application (Annexure-I) through an e-mail to the state/UT specified email ID in Annexure-II.
• Standing Instructions (SI) - Submit an Application (Annexure-I) through an email to the state/UT specified email ID in Annexure-II.
• You will find the annexures on SBI's website linked above.

you want a refund of the instalment/EMI already paid:

Submit an Application (Annexure-I) through an email to the state/UT specified email ID in Annexure-II.

Note:

• You can also submit handwritten applications in the same format at the home branch.
• Effecting deferment of EMI/NACH/Refund may take approximately 7 working days.

Impact of Deferment

SBI has explained the impact of defering your EMI payments with examples.

"Interest shall continue to accrue on the outstanding portion of the Term Loan during the moratorium period. The possible impact of the extension of the repayment period has been explained below:

• Impact in case of Auto Loan - For a loan of Rs.6 Lacs with a remaining maturity of 54 months the additional interest payable would be Rs.19,000 approx. equal to an additional 1.5 EMIs.
• Impact in case of Home Loan - For a loan of Rs.30 Lacs with a remaining maturity of 15 years, the net additional interest would be approx. 2.34 Lacs equal to 8 EMIs."

Is rescheduling of payments applicable for all kinds of SBI Terms Loans?

Yes, it is applicable for all term loans in all the segments and tenures. All term loans (including Agricultural Term Loans, Retail, Crop Loans and loan under Pool Purchases) and Cash Credit/Overdraft are eligible.

Does the rescheduling applicable only for principal or does it include interest?

• SBI, on its website, explained that the rescheduling of principal can be done for a period of three months falling due between 1 March to 31 May. "For example, where the last instalment of a Term Loan falls due for payment of on say 1st March 2020, it will become payable on 1st June 2020," it said.
• For EMI based Term Loans, it will be three EMIs falling due between 1 March to 31 May 2020 and the tenure will be extended by three months and have to be repaid during the extended period. The original repayment period for loan will get extended by 90 days.
• For other Term Loans, it will be all the instalments and Interest falling due during the same period, irrespective of the tenor of payment i.e. Monthly, Quarterly, Half Yearly, Annually, Bullet Payment etc. For Term Loans, where the repayment has not commenced, the interest portion for three months alone needs to be reckoned.

What happens if the extended Tenor of SBI Term Loan goes beyond the maximum period stipulated for a product or as stipulated in the Loan Policy?

SBI has said that it will be extended for all such Term Loans without the need for seeking deviations
or approvals.