Due to the Coronavirus pandemic, the 21-day lockdown has affected a lot of people financially. Many daily wage workers and salaried individuals have had pay cuts or have been laid off during these difficult times. To ease their financial situations, RBI has announced an EMI holiday or a moratorium for 3 months. A moratorium is where the terms of the repayment of a loan is restructured with the mutual consent of the borrower and the lender. The borrower has the option of not making his loan payments during the period that has been set. But the interest will continue to accrue on the loan amount to be paid.
For example, RBI has announced a moratorium period starting from March 1,2020 till May 31, 2020, for a total of 3 months. The due date to start repayment will be from June 1, 2020. For people who have made their EMI payments in March, would get the moratorium only for 2 months. Opting for moratorium is not compulsory for everyone. So those who are financially stable enough to make their EMI payments as per scheduled can make their payments.