Moratorium 2.0 has been announced by The Reserve Bank Of India and Borrowers can now opt to defer their EMI for another three months i.e from June 20 to August 20. Amid Corona crisis, RBI had announced Moratorium 1.0 for the period of three months from March 20 to May 20.
It is super important to learn about the pros and cons of the Moratorium 2.0 before you rush to the bank to avail of one. In this blog, we will put forth some questions which we have learned from the Moratorium 1.0
Lessons learned from Moratorium 1.0. Will it impact on Individual capacity to raise debt?
Theory Says that opting for EMI moratorium will have no effect on your creditworthiness nor will it affect your CIBIL score. However your debt raising capability will be impacted in the near future. Banks will be more cautious while sanctioning EMI based credit facility for those who have availed the EMI moratorium over the next 3 -12 months.
According to the discussion between Banks and Money Control two points concern the banks
1. Uncertainty of an individual to handle full responsibility of the EMI after the moratorium period.
2. Suspect over the willingness of business owners to take a view of their business ever 7/10/15 years if a 2 months dent could their visibility.
1. When the Moratorium was announced by RBI how can Banks have such an illogical view?
One can debate over Bank's illogical view when the moratorium was due to the unprecedented circumstances and does not define your business strength. But one should remember that Banks are not here to help you in the hour of your need and they can justify them being cautious about how your business will survive in the future under COVID like a crisis.
2. Impact on Types of Loan accounts of the moratorium.
Compared to Corporate loans the moratorium is more likely to impact the retail loans. The following type of loan accounts will have the most impact.
1. Personal Loan.
2. Unsecured Business Loan.
3. Loan Against Property.
4. Home Loan Top-Ups.
5. Fresh Home Loans.
3. How have no cash flow problems but opted for Moratorium 1.0 due to uncertain crisis? What should I do now?
One of the most common reasons for choosing Moratorium 1.0 was the uncertain length of the lockdown. But if you don't have any cash crush and today when more relaxation being allowed by the government and little visibility of the future not opting for lockdown 2.0 would be a good choice.
4. May I eligible for Moratorium 2.0 if I did not apply for Moratorium 1.0
Before opting for Moratorium 2.0 one should know its effects on your credibility. However if you are experiencing cash flow problems it would be wise to opt for moratorium 2.0 rather defaulting on your EMI.
5. What will my credibility get affected if I opt for moratorium 1.0 and 2.0 on all my loans?
Opting for both Moratorium 1.0 and 2.0 means that you will not be paying EMI for another 5-6 months. But this will surely affect your credibility as you will not get any loans from any good banks because they like to see your loan repayment history of a minimum of 6-9 months.
6. If I don't opt for moratorium 2.0 how should I manage my cash flow?
If you already have a working capital facility or term loan from your bank you should reach out to them to check for any top-up under ECLGS ( Emergency Credit Line Guarantee Scheme) if you are eligible you should get a top-up it would be better to go it than moratorium 2.0
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