The ongoing Covid-19 pandemic has created massive financial stress for individuals and businesses, across all sections of the society. To ease borrowers' burden during these challenging times, the RBI (Reserve Bank of India) has issued a directive to all commercial banks and NBFCs to offer customers an interim relief in their loan repayment schedules.
Following this directive, HDFC, one of the top lenders in the country, offers customers moratorium on loan EMIs and credit card payments for six months – starting from 1st March 2020 to 31st August 2020. In this article, you can find all details on moratorium for term loans and credit card payments from HDFC Bank.
Overview of EMI Moratorium from HDFC Bank
In line with the RBI guidelines and to offer customers relief, HDFC offers EMI moratorium for all existing borrowers – term loans and credit cardholders. The objective of the moratorium is to help individuals and self-employed professionals deal with the low cash flows, as a result of Covid-19 induced lockdowns and business disruptions.
Initially, the moratorium was offered only for three months from March to May. In June, the RBI instructed banks and NBFCs to extend the moratorium offer for a further three-month period between 1st June 2020 and 31st August 2020.
Understanding Moratorium – It is NOT a Waiver
The moratorium means a temporary pause of payments for a limited period. Customers who opt for it can skip paying their EMI payments and credit card payments during the moratorium period.
However, note that there are negative financial consequences of availing the moratorium. Note that the moratorium is not a waiver. The interest will continue accruing on the outstanding principal amount during the moratorium period.
For example, if a customer avails a three-month moratorium for June, July, and August, he/she needn't pay the EMI during these three months. However, the loan continues to earn interest. From September, the borrower will have to resume the payments with a revised (bigger) EMI.
Here’s what happens when a customer opts for the EMI moratorium:
The bank will not ask you for EMI payments during the moratorium period.
Your credit score will not be impacted, and the missed payments will not be tracked in your credit history.
Interest will continue to accrue on the outstanding principal during the moratorium period.
The loan tenure will get extended post-moratorium, or you may have to pay a bigger EMI.
Let’s explain the impact of opting for the moratorium with a couple of examples.
Scenario 1: Consider an ongoing auto loan of Rs. 8 lakhs. The remaining tenure is 36 months, and the last EMI (as per the original schedule) is on 7th May 2023. If the borrower opts for a three-month moratorium – from June to August – he will incur an additional interest of Rs. 25,500 as per current interest rates. This amount would be added to his outstanding principal at the end of the moratorium. This would lead to an increase in the tenure by four months, and the revised repayment schedule will end on 7th September 2023.
Scenario 2: Take the case of a personal loan availed by a salaried individual. The loan amount is Rs. 4 lakhs, the original repayment tenure is for 48 months, and the last EMI is on 4th June 2024. The borrower opts for a moratorium for two months – July and August 2020. This leads to an additional interest of Rs. 15,000. As a result, the EMI increases by 1.4 times (40% increase in regular EMI), and the last tenure is moved to 4th October 2024.
Eligibility for HDFC Bank Moratorium
All existing HDFC Bank customers who have taken retail loans before 1st March 2020 are eligible for the moratorium. It also includes credit cardholders, Agri loan borrowers (Kisan Gold Card), microfinance, SME, and corporate customers. However, note that granting the moratorium request is at the sole discretion of the bank.
How to avail moratorium at HDFC Bank?
Existing customers can easily apply for the moratorium online at the website of HDFC Bank. Provide your consent for the moratorium by selecting your EMI pay choice, enter the Captcha Code, and click Submit. You have two options:
Defer unpaid EMIs falling between 1st June and 31st August - select this option if you wish to apply for the moratorium.
Keep EMI payments as per schedule - select this option if you do not want to opt-in for the moratorium.
Make sure that you have the loan account number handy to complete the process. Enter your registered mobile number, loan account number, and the OTP received on your mobile to complete it.
If you want to opt for a moratorium on several loan products, then you can repeat the steps mentioned above for each loan product.
HDFC Bank Moratorium for Credit Card Payments and Loans on Credit Cards
Besides term loans, HDFC Bank also offers a moratorium on credit card bills and loans availed on credit cards. By opting for the moratorium, cardholders can defer payments until 31st August 2020.
However, note that you will have to pay the minimum amount due (on the total outstanding and accrued interest) after 31st August 2020. All credit card holders are eligible for the moratorium provided they have been regular with their bill payments before 1st March 2020.
How to avail moratorium on credit cards?
Voluntarily stop payments during this period – i.e., do not pay your credit card bills.
If you have set up automatic payments, turn off AutoPay using mobile banking or net banking. You can resume automatic payments post moratorium period.
Key Points to Keep in Mind
Before you apply for the moratorium from HDFC Bank, here are a few key points to know:
If you have availed moratorium for March to May, you need to apply again if you wish to extend the facility from June to August.
You can apply for only one month i.e., July and re-apply again for August if you require an extension of the moratorium. This is a prudent measure, as it gives you time to evaluate your financial situation for August and then decide.
If you do not wish to apply for the moratorium, you don't have to do anything. By default, the HDFC bank does not apply the moratorium for all. Only customers who need the facility should take action.
The moratorium is only available for borrowers in India. If you’re an NRI customer who has taken a loan in India, you can write to email@example.com to opt for the moratorium.
In case you're not able to complete the online request for moratorium due to a mismatch in bank records, you can write to the team at the above email ID.
If your EMI for the month has already been debited before you applied for the moratorium, reach out to your relationship manager to reverse the payment.
Opting for the moratorium continues to accrue interest on your outstanding payments, leading you to face a bigger loan burden, post-moratorium. Hence, go for it, only when you’re facing a severe financial crunch. Remember that it isn't a waiver but only a temporary pause – so exercise it with caution.