The outbreak of the COVID-19 pandemic has been problematic for most of the people. It created a drain in the finances due to lockdowns getting imposed and suspension of daily activities resulting in unemployment, losses in businesses, inflation, and fall of GDP. The six-month moratorium on loan repayments provided by the banks provided relief to those who opted for it. The moratorium on loan EMIs expired on 31 August. The Supreme Court is currently hearing the matter regarding the waiver of interest on load moratorium.

People, who have availed the moratorium relief, must remember that the bank will continue to charge them interest on outstanding loan amount at the rate applicable for the respective loan during the moratorium period. (This is being reviewed by the Supreme Court). This interest will be added to the principal amount – essentially the unpaid EMIs along with the accrued interest will be added to the loan outstanding. This will increase the tenure of the loan, not the EMIs. Hence the EMI would remain the same, but the tenure of the loan will increase.

Any delay in payment of dues after the expiry of the moratorium could qualify as a default and will impact the credit score. Thus it is advised that people having adequate funds should clear their dues on time now onwards to avoid a negative impact on the credit score, which can affect the loan taking ability in the future.