In a bid to give some relief to taxpayers and homebuyers amid the Covid-19 crisis, the Reserve Bank of India (RBI) had some time back directed all banks, NBFCs and housing finance companies (HFCs) to allow three months’ moratorium on the EMI payments of various retail loans, including home loans, as well as working capital loan instalments which were due for payment between March 1, 2020, and May 31, 2020. The move was aimed at helping borrowers manage their short-term liquidity concerns.
Since the Coronavirus pandemic is still far from over, the RBI governor recently further extended the EMI moratorium by 3 months till August 31, 2020. With this extension, borrowers would now get a six-month EMI holiday for dues falling between March 1, 2020, and August 31, 2020. Various banks have announced details of the EMI moratorium on their websites. Here is a look at the details of YES Bank's moratorium on loan EMIs and credit card dues.
How to apply for EMI moratorium at YES Bank?
Follow any one of the three methods mentioned below to opt for the EMI moratorium.
Visit the website of YES Bank and navigate to the EMI moratorium section. Choose the option: “I would like to opt for Moratorium” and follow the instructions on screen.
SMS: Respond to the SMS received on your registered mobile number.
E-mail: Respond to the email received from YES Bank on your registered email id.
How to opt for a moratorium on credit cards at YES Bank?
An SMS will be sent by the Bank to Cardmembers registered mobile number with a request to ‘OPT-IN’ for the scheme. Cardholders will have to click on the link in the SMS and opt-in for the scheme.
Participation in the moratorium scheme is entirely voluntary and it is understood that the participation by the Cardmember/s shall be deemed to have been made voluntarily.
Moratorium Benefit for Term Loans/CC/OD
Customers can avail the moratorium scheme for term loans, Cash Credit (CC) or OD facility(ies) for the period March 01, 2020, to May 31, 2020, by requesting the Bank to opt-in for the scheme, provided the account classification with the Bank is ‘Standard’ as on March 01, 2020, and is not reported as Fraud, Red Flagged Account or Wilful Defaulter by the Bank or any other Banks.
An SMS will be sent by the Bank to your registered mobile number requesting you to ‘OPT-IN’ for the scheme. You will have to click on the link provided in the SMS and follow the instructions if you choose to opt-in, on or before April 15, 2020, unless otherwise extended by the Bank.
Instalments in Moratorium
The moratorium covers all unpaid principal and interest dues for March 2020 and all principal and interest amounts falling due in April to August 2020.
Interest During Moratorium Period
In line with RBI guidelines, the Bank will continue to charge or accrue interest during the period of moratorium. This interest accrued during the moratorium period shall need to be paid by the customer to the Bank at the end of the moratorium period. The Bank encourages the Borrower’s with adequate funds and cash flows to continue to pay the instalments to avoid additional interest and elongation of the tenor.
Overdue Loans and NPAs in Moratorium
The moratorium benefit for the principal and interest as per RBI guidelines is only eligible for dues falling between March 01, 2020, and May 31, 2020, and not for overdues outstanding as on March 01, 2020. All overdues before March 01, 2020, shall continue to attract the IRAC guidelines as applicable, without any moratorium dispensation. Hence, you are requested to clear your outstanding dues or default for the period before March 01, 2020, for which the extant IRAC and provisioning norms shall apply.
Additional Reading: All That You Need to Know about HDFC Bank EMI Moratorium
Adjustment of Loan Tenure in Moratorium Benefit
For the retail loans under the Equated Monthly Instalments (EMI) structure, the tenor will be extended by the corresponding period for which the moratorium is availed e.g. if the EMI for March 2020 is paid, and the moratorium for April and May 2020 has been availed, then the loan tenor will be extended by two months. However, there will be additional EMIs which will be payable on account of the impact of the deferred interest during the moratorium period.
For example, a customer with an EMI based loan having Principal outstanding of Rs. 15 lakhs with a residual tenure of 15 years, would need to pay an approximate additional interest of Rs. 1.01 lakh [assuming ROI of 8%] i.e. approximately 11 additional EMIs (which will include the three EMIs of the moratorium) due to the three months moratorium. For non-EMI based corporate loans, the repayment schedule for the term loan shall have a parallel shift of all instalments by a period of up to three months, in case the moratorium benefit is availed.
Mandate for Fresh PDC or Auto Debit
If you opt for the moratorium scheme, the residual tenor will increase to recover the accrued interest during the moratorium period. However, in case the EMI or instalment amount increases or the existing NACH mandate or PDC expires, then a fresh mandate or PDC will be required.
Interest Payment Timelines
Term Loans – The accrued interest shall be payable after the completion of the moratorium period. The schedule of repayment of such interest shall be communicated by the Bank to the borrower. For CC/OD facility, the accrued interest shall be payable immediately after the completion of the moratorium period on June 01, 2020.
Penalty in Moratorium Scheme
YES Bank would not charge any penalty or penal interest for availing the moratorium benefit during the moratorium period. The Bank only will accrue the interest as per the loan contract rate during this period. However, in case the borrower does not pay such accrued interest as and when the same becomes due, then penal charges or penal interest would be applicable.
If you opt for COVID 19 Moratorium on your term loan, a new repayment schedule will be shared by YES bank. The interest will continue to accrue on the unpaid amount, and customers are liable to pay this after the moratorium period. If you opt for COVID 19 Moratorium on your term loan, a new repayment schedule will be shared by the bank. The interest will continue to accrue on the unpaid amount, and customers are liable to pay this after the moratorium period.