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FAQ For All Term Loans

FAQS – HOME LOANS, BUSINESS LOANS – SECURED, - COMMERCIAL VEHICLE & AUTO LOANS, LOAN AGAINST PROPERTY, SECURED TERM LOANS TO MSMES, UNSECURED BUSINESS LOANS, GOLD LOANS AVAILED FROM EQUITAS SMALL FINANCE BANK (ESFB)

What is the recent regulation released by RBI on moratorium due to COVID-19?

As per recent statement issued by RBI through press release dated 27th March 2020, various developmental and regulatory policies have been announced that directly address the stress in financial conditions caused by COVID – 19. All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions”) are being permitted to extend the moratorium by another three months on payment of instalments in respect of all term loans from June 01st 2020 to 31st August 2020 thereby extending the moratorium period to six months (from 01st March 2020 to 31st August 2020). Accordingly, the repayment schedule and subsequent due dates, as also the tenor for such loans, may be shifted across the board by additional three months.

What happens if a borrower has not paid some instalments and is in overdue as of 29th Feb 2020:

All loan accounts availing moratorium (including the overdue accounts as on 29th Feb 2020) are called standstill accounts and the overdue/ SMA status as of Feb 29th , 2020 remains unchanged till the end of moratorium period. However, if the customer pays the overdue amount during the moratorium period, the overdue/ SMA status can be improved.

What is the meaning of moratorium and what is the period of moratorium as applicable under COVID-19 package by ESFB?

Moratorium means a deferment of an instalment. This means that during the period of moratorium it is permitted if the customer is unable to pay EMI to the lending institution (ESFB). The interest which is accrued on unpaid amount during the moratorium period shall become payable after the moratorium period. The moratorium period shall be applicable for all loans outstanding on 1st March 2020 and shall be effective from 1st March 2020 till August 31, 2020.

Does a moratorium mean interest free period?

The moratorium doesn’t mean interest free period. When a customer does not pay an instalment due to moratorium, he would be required to pay that instalment at the end of the tenure of the loan agreement and for this postponement period, till that instalment is paid, interest would be charged on such instalment amounts till the date on which it is actually paid

Is this a waiver of EMIs or a deferment of EMIs?

This is not a waiver, but a deferment of EMI’s. Customer will have to pay the EMI s at a later date with an extension of the tenor so that the deferred instalments along with the accrued interest would be paid over such extended tenor.

What will be the impact on the EMI amount after the moratorium or how will the loan get repaid?

The EMI amount would remain constant and the tenor would be increased accordingly to account for the additional accrued interest payable on the instalments which are being paid later.

Does the moratorium cover both Principal and Interest?

Yes it covers both the Principal and the Interest.

Is the moratorium compulsory for all the customers?

The moratorium is not compulsory for all the customers.

If a customer chooses to avail the moratorium from 01st June 2020, the customer needs to intimate the Bank in writing on or before 3rd June 2020, The Bank will have the discretion on extending the moratorium accordingly. For requests which have not been received before 3rd June 2020, we would be presenting the ECS/NACH/PDCs at the applicable due dates.

If a MSME customer having secured Term Loan chooses to avail the moratorium from 1st June 2020, the customer needs to intimate the Bank in writing on or before 10th June 2020

Will ESFB grant moratorium to all loan customers by default?

No. The extended moratorium from 01st June 2020 till 31st August 2020 shall not be available to all loan customers by default. The borrowers who wish to avail the moratorium should make a specific request to ESFB through a letter in writing by visiting the branch before 3rd June 2020. The moratorium may be extended by the Bank subject to such conditions as may be in place from time to time.

In case a customer opts to go for moratorium offer, then will it have any adverse impact on CIBIL score?

As per the released regulation, the rescheduling of payments will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely affect the credit history of the beneficiaries.

Is it moratorium applicable for loans disbursed after the announcement of the package?

The moratorium is applicable only for loans disbursed before the moratorium announcement by RBI viz. 27th March 2020.

Is the moratorium applicable for all modes of repayment like EMI / Instalment plus interest?

The moratorium is available for all loans being paid through any terms of repayment as follows:

  • Equated Monthly instalments where the Principal and Interest are clubbed together
  • Principal and interest components debited separately on a monthly basis;
  • Structured Repayments as per the sanctioned terms

In this FAQs for the purpose of simplicity we have been using the term EMI for all the modes of repayment of instalment as listed above and is implied to mean all the above three modes of repayment.

Which all loans shall be eligible for the relaxation?

All loans, including Home Loans, Business Loans – Secured Auto Loans, Loan Against Property, Secured Term Loans to MSMEs, Unsecured Business Loans, Gold Loans and all other term loans. The Bank shall specify separately to the borrower if certain select categories of borrowers are not to be included in line with RBI or GOI guidelines.

Would a prepayment penalty be levied if the borrower wants to make a prepayment of unpaid instalments during the moratorium?

There will be no prepayment penalty if the borrower wishes to pay the deferred instalments and accrued interest at any point in time within the deferred period. Kindly also note that if any borrower remits the deferred instalments early, then to that extent, the borrower would stand to benefit by way of not accruing any interest thereafter.

Would multiple loan accounts be eligible for the moratorium?

All loans availed by a customer are covered under moratorium.

Would the moratorium be applicable to NPA customers ?

The moratorium shall not be applicable to NPA customers.

Would the moratorium be applicable to loans already under moratorium where only interest is being paid?

The moratorium can be availed by such borrowers who are only servicing interest due to the moratorium period as per the terms of the existing loan. In such cases the interest payable can be deferred to the extent of COVID-19 moratorium. For example all such affordable housing /housing loans where the borrower is paying a PRE EMI interest due to part disbursement of housing loans can postpone the payment of PRE EMI to the extent of moratorium period. However interest accrual shall continue. MSME (Secured Loans) customers who wish to avail moratorium, need to intimate the Bank in writing on or before 10th June 2020 The unpaid interest during the moratorium period shall become payable by extending the moratorium period or loan tenor.

Does the moratorium also cover borrowers who are NBFCs:

Moratorium would be offered by the Bank to borrowers who are NBFCs which are eligible based on parameters that the bank may have in place from time to time.

If I have surplus cash, is it wise to opt for moratorium?

No. The EMI’s are only deferred during the moratorium period and there will be additional interest amount payable by you. Hence, it will be wise to continue with EMI repayment as per you cycle dates, if you have sufficient cash flows.

I have opted for moratorium from 1st March 2020 till 31st May 2020, can I opt out of moratorium now?

Yes, You can opt out of our moratorium and start repaying your EMI as per your cycle dates

If I opt out of moratorium now, later in a month or so can I opt for moratorium again as the market condition is quite volatile?

Yes. You can opt out of moratorium and start repaying your EMI as per your cycle dates and in the event you are unable to service the EMI as per the cycle dates, we request you to reach out to the nearest branch or our representative and submit your request for moratorium for subsequent month/s.

Toll-free number - Asset banking: 1800 103 2977