State Bank of India, the country’s largest lender, today issued guidelines for customers to avail moratorium on their term loan EMIs but noted that they could end up paying interest that could be in multiples of their monthly payments.
“In terms of RBI COVID-19 regulatory package, SBI has initiated steps to defer the instalments and interest/EMIs on term loans falling due between 01.03.2020 to 31.05.2020. Accordingly, the total repayment period will be extended by 3 months over the original repayment period,” the bank said in a statement on its website.
SBI said that customers who do not wish to avail moratorium, bank-speak for suspending EMIs, do not wish to do anything and that their EMIs will be recovered automatically.
Customers who wish to avail of the moratorium will have to download a form (a second form will also be needed if the EMI is cleared through the National Automated Clearing House (NACH)) and email them to a state-specific email address.
Customers can also apply for refund of EMIs if they have already been deducted using SBI’s Annexure 1 Form.
But the bank also pointed out, that in line with the RBI’s announcements to provide relief to customers, deferment could result in interest charges.
For instance, the bank said that in case of an auto loan, “for a loan of Rs 6 lakh with a remaining maturity of 54 months the additional interest payable would be Rs 19,000 approx. equal to additional 1.5 EMIs.”
In the case of a home loan EMI, for a loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be approx Rs 2.34 lakh equal to 8 EMIs.
Experts have warned that customers should continue to make their EMI payments if they the means to do so as the deferral could result in steep interest charges.
The deferral has been offered by the RBI as a step to provide relief to customers whose cash flows have been affected by the COVID-19 induced lockdown.
SBI EMI Moratorium FAQs by CNBCTV18 Digital on Scribd