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State Bank of India (SBI), on Wednesday, said it has simplified the process of stopping the equated monthly installments (EMIs) by initiating an SMS communication to nearly 85 lakh eligible borrowers to seek their consent to stop the installments.
This move comes in the wake of the Reserve Bank of India (RBI) extending the moratorium on term loans last Friday by another three months up to August 31due to the extension of the nationwide lockdown and continuing disruption on account of the pandemic.
“The borrowers have to reply with a ‘Yes’ to a designated virtual mobile number (VMN) mentioned in the SMS sent by the bank within 5 days of receiving the text if they wish to defer the EMIs,” said India’s largest bank in a statement.
This way the bank can obtain the consent of all of eligible loan customers to stop their Standing Instructions (SIs) / NACH (National Automated Clearing House) mandate for the EMIs falling due in June, July, and August.
The extension of moratorium and deferment of EMIs would give some respite to the borrowers amid Covid-19 outbreak, said the bank.
“In line with the recent RBI announcement on extension of the moratorium on term loan EMIs by another three months, State Bank of India has decided to extend the moratorium by another three months in loan accounts of all eligible customers without waiting for their request,” said the statement.
Late last week, SBI Chairman Rajnish Kumar said only 20 per cent of the bank’s borrowers had opted for the loan moratorium.
Regulatory package
As part of its Covid-19 regulatory package, the RBI, on March 27, permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India financial istitutions, and non-banking finance companies (including housing finance companies and micro-finance institutions) to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1.
The RBI, on May 23, extended the aforementioned lockdown by another three months – from June 1to August 31.
Considering the two moratoriums, the repayment schedule and all subsequent due dates, as also the tenor for such loans, get shifted across the board by six months.
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