Covid-19: Takers of Repayment Holidays Drop

As the Covid-19 crisis continues, so does the partial nationwide lockdown and hence the financial crunch. In these trying times, banks are trying to assist their customers as much as possible, such as the three-month moratorium extension by the RBI. However, the people availing of the loan moratorium have dropped to less than 30% after their financiers advised them to.

What is a Loan Moratorium?


A loan moratorium is like a ‘repayment holiday’ or a particular period of time after which the borrowers are supposed to start paying their monthly EMIs. Normally the payment begins after the loan has been disbursed, but loan moratoriums make it possible for the borrowers to delay repayment for a short while.

Are They a Good Option During Covid-19?

Since coronavirus brings with it a financial uncertainty, financiers are advising people to not take loan moratoriums longer than absolutely necessary. This is done to ensure that the repayment behavior of a customer doesn’t change too drastically, as this will affect their CIBIL scores negatively(CIBIL score is the measure of your credit reliability and highly impacts your loan acceptance possibility. Read more on Dialabank: CIBIL score). As quoted by Sanjay Sharma, MD, Aye finance, “Whether the customers need this provision or not is to be deeply evaluated by us. We want to allow our borrowers to make payments whenever they are comfortable.”

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