EMI Moratorium: Is It Really Reducing Loan Burden Of Customers?

Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:

Mr. Ravi Shankar, Co-Founder, and CEO, Active Intelligence Pte Ltd
Mr. Anil Kumar Gupta, Partner, MSC
Mr. Ruchir Inamdar, Strategist, Jumper.ai
Mr. Prabhanjan Dhotre, Director, Beehive Capital Advisors Pvt Ltd
Mr. Rishi Prakash Mantri, Head of Business Solution Group, ICICI Bank Housing Finance Company
Mr. Shreejith Menon, Senior Director, IDFC FIRST Bank
Mr. Neeraj Chandra, Head of Operations and Technology, India, Abu Dhabi Commercial Bank
Ms. Aishwarya Jaishankar, former SVP – Digital Products & Platforms, HSBC
Mr. Rakesh Watal, Head Liability Operations Western Region, HDFC Bank
Mr. Vineet Tewari, Director, Crescent Payments Private Limited
Mr. Kamonasish Aayush Mazumdar, Founder & CEO at Foodieverse
Mr. Shashank Chowdhury, Former Managing Director -India, Infinite Zero
Mr. Raghu Veer Dendukuri, Founder, Ideal Nation, and Solution Architect at Invincible Tech Systems Inc.
Mr. Ishan Vaish, India Partnership Manager- Worldwide Developer Relations, Apple
Mr. Shirsha Ghosh, Co-Founder Torit Innovations
Mr. Hemal Shah, Technical Product Manager, Mastercard
Mr. Ajay B Panicker, CEO & Founder, NetPay Limited
Mr. Riaz Maniyar, Founder & CEO at easy2lend.com
Mr. Subbiaa Olimuthu, Product Manager – Rupay Product
Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous

Ever since the outbreak of the pandemic, people are having a hard time to meet their financial commitments and are struggling with their EMI’s. In order to tackle this, the regulator granted a moratorium for EMI payments. But little did we know this moratorium did not mean a waiver of interest but only deferment of EMI!

Here’s an experience with ‘too big to fail’ kind of bank shared by one of the community members. He stated, “The link to apply for moratorium extension is shared by this bank on the evening of 5th with a statement that if the EMI for the month of June was deducted before the customer applied for an extension of the moratorium, the EMI amount will be refunded to the customer’s account subject to the customer has applied for the extension of the moratorium in the same or the earlier month i.e. June. However, the bank takes more than a week to refund. The bank has enjoyed the float and has, in all probability, made money on the same as well for the entire duration of this delay. While the rise in tenure and interest is justified, how is it justified that the bank parks this amount and uses the float, the customer loses the interest on the same and ends up paying more and longer?”

Well, a member mentioned, “Technically if one looks at it, the banks 3 months loan business got done without any payout. Technically if your EMI is Rs 1 lakh a month – 3 month’s no EMI ( not free) at 8%. Which means the bank just disbursed you a PL without you even wanting at 8%. They just back-ended it by 3 months – people think it’s free of cost but it is not. And if any default will be deferred over a 10-15 year period and not at one shot. So am I right to assume that the banks’ loan book just got a small 3-month auto disbursement. So effectively banks just gave a PL by default to all their borrowers without any DSA payout.”