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Customers should benefit from 3-month moratorium on term loans: Shyam Srinivasan of Federal Bank

Updated : March 28, 2020 01:12 AM IST

There is some relief for people with EMIs as the Reserve Bank of India has announced a 3-month moratorium for all term loans including credit card dues.

Banks have clarified that the entire payment schedule will be shifted by three months so there will be no balloon payment in the fourth month. However, interest will continue to accrue on the principal outstanding for these three months.

CNBC-TV18 spoke to Shyam Srinivasan MD & CEO of Federal Bank and Sunil Mehta Chief of IBA to understand what it means for the consumers.

Srinivasan said, "The principle is customer should have the benefit of not paying if they choose to for these three months. Effectively these three months are what many of you were referring to as stop the clock, that is how we see this."

"If by any chance even if there is a debit to the Electronic Clearing Services (ECS) and the customer calls and says please refund, he is well within his rights. The default method is, the customer is advised saying, you may choose to opt out for these 3 months period to not debit your instalments."

"Now, the customer either ignores it or it continues to debit and he recognises it later, there is always a process. Neither the bank nor the customer is at fault in this situation, it is an environment led event which has caused this action to happen."

So, there will be process issues which could be cured either by customer initiating it or the bank initiating it, he added.

"However, the default process will be the customer who will get an advice saying that during these 3 months kindly advice if you would like us to continue with your EMI process or would you like to opt out."

Mehta said RBI has simply given a scope for all the banks to prepare a policy and uniformly allow 3 months moratorium across the board.

"I don't think there is any discretion available there, the only thing is there is a proper process that every bank will formulate a policy, will get it approved through a board which is a process of corporate governance which every bank will observe."

Published : March 28, 2020 01:12 AM IST

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