EMI deferment as part of coronavirus relief may not be free; SBI clarifies moratorium to come at extra cost

State Bank of India (SBI), country’s largest public sector financial institution, has said that the moratorium for the payment of interests on loans will come with an additional cost. The bank clarified that customers who are capable of making loan payments despite the lockdown, should go forward and do it.

The clarification came after Reserve Bank of India (RBI) asked all the lending institutions to offer a three-month moratorium on repayment of term loans falling between 1 March and 31 May due to the outbreak of coronavirus.

According to a report by The Financial Express , SBI management on Wednesday clarified that the deferral of interest payment and not the waiver hence it would come at a cost.

“Any deferment of interest over such a long period will entail additional cost because it is not interest waiver, it is interest deferment,” the financial daily quoted SBI Managing Director Challa Srinivasulu Setty as saying.

SBI on Tuesday tweeted that it has initiated steps to defer the instalments and interests/EMIs on term loans between 1 March and 31 May and extended the repayment period by three months.

It had also pushed back the interest on Working Capital facilities for the period to 30 June, 2020.

On its website, SBI said that it is providing two options to customers who want to defer recovery of instalments/EMI.

Under National Automated Clearing House (NACH), customers will have to give an application as well as a mandate for extension of NACH to stop instalments through email.

It has also given the option to customers to submit an application through a specified email-ID to the bank.