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Moratorium Scheme – A Beneficial Impact On Loan Repayment

Moratorium period refers to the period of time during which you need not pay an EMI on the loan taken. The Reserve Bank of India had declared a welcome relief announcing a move to allow banks and other financial or lending institutions to offer a three-month moratorium on repayment of all term loans, especially to enable the borrowers to overcome the economic fallout from COVID-19.

Who must apply for the Moratorium scheme? 

The individual borrowers who do not have large cash reserves set aside as an emergency corpus, or who don’t have absolute certainty about their income for the coming months, should opt for the moratorium.

The loan amount continues to accrue moratorium interest during the moratorium period, repaying the moratorium interest loan amount within the moratorium period will help you reduce your interest cost on moratorium interest amount when you will start paying back your EMIs. So, one should opt it only if there is a genuine need.

The scheme has the benefit – 

Win-Win for both Investors and Borrowers 

A moratorium would be helpful to both investors and borrowers operating with P2P lending; on both humanitarian as well as the financial ground. If borrowers will have less or no salary during this period, it will default and put investors principal at risk. Hence if borrowers opt for a moratorium, they will continue paying interest amount and the investors will continue earning their monthly returns. Once the borrower gets his/her salary/income in the coming months, he/she will pay the complete EMIs. This way, the risk of investors’ principal investment goes down against the situation when borrowers will not get this option. 

Taking the fullest advantage of the RBI imposed Moratorium scheme will benefit in a sure way especially during these stressful times which will also aid an individual to manage his/her finances in a better way for the coming days. 

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