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accounts iconFAQ for All term loans

FAQs – Home Loans, Business Loans – Secured, - 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 allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. Accordingly, the repayment schedule and subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months.
    • What happens if a borrower has not paid some instalments and is in overdue as of 29th Feb 2020:
      The moratorium announced by RBI is applicable only for instalments falling due between 1st March to 31st May 2020 and not for amounts which are overdue as of 29th Feb 2020. All amounts which are in arrears as of 29th Feb 2020, shall be paid immediately by the borrowers. If these instalments become overdue for 90 days or more, the account would become NPA and hence borrowers are advised to clear all overdues as of 29th Feb 2020 immediately.
    • 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 May 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. Customer will have to pay the EMIs at a later date with an extension of the tenor. If three EMIs fall during the moratorium period, the tenor shall be extended by 3 months but the instalments payable would be higher than the original instalment value since interest would be charged from the date of deferment to the date of actual payment of the instalment.
    • What will be the impact on the EMI amount after the moratorium or how will the loan get repaid?
      The loan tenor shall be extended to the extent of moratorium period availed by a maximum period of three months. Due to accrued interest the last three EMIs shall be higher than the normal EMIs. If the customer chooses not to extend the tenor of the loan, he/she can opt for paying higher EMI resulting into amortization of unpaid EMIs with accrued interest within the original loan tenor.
    • 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 customer has the choice not to avail the moratorium and pay the EMIs regularly. However the customer needs to intimate the Bank in writing to consent@equitasbank.com on or before 4th April 2020, if he/she doesn’t wish to avail the moratorium.
    • Will ESFB grant moratorium to all loan customers by default?
      Yes the moratorium shall be available to all loan customers by default. The borrowers who do not wish to avail the moratorium should make a specific request to ESFB in writing by e-mail or letter to opt out of the moratorium package.
    • 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 disbursement 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 one go through a bullet payment.
    • 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. Such borrowers can pay the accumulated and unpaid PRE EMI along with accrued interest by extending the loan tenor by three months. Even MSME loans where moratorium is granted as per original terms of loan shall get an extended moratorium by maximum three months. 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:
      Our understanding is that as per RBI guidelines, this moratorium is not applicable for borrowers who are NBFCs. However if there is any change in the same, basis further clarification from RBI, the same would stand corrected accordingly.
If you wish not to opt for the moratorium send an email to consent@equitasbank.com

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