The effects of Covid-19 are faced by all and sundry and the loan holders are facing a daunting task of paying EMIs in time. Most of the Governments and Central Banks have come forward and announced number of measures to help their citizens and the Indian Government and Reserve Bank of India (RBI) are not behind. Both of the them have announced several measures to address the needs of the poor and needy and also of the middle class.
RBI has announced several measures, but I am looking at one particular step which is relevant for the home loan EMI payers. Reduction in Repo Rate by 75 basis points or 0.75%. RBI expects that this rate cut will be passed on to the customers immediately by the commercial banks. In addition, most of the banks have announced the EMI holiday for three months.
I would love to share my personal experience. I was 25 and I had 3 big bosses. All three of them were experienced in their field and knew their trade thoroughly. All were interested in the well-being of the organization, but their approaches were totally different. On many occasions, I would get marching orders from at least two of them but the results they would expect were totally different. And timeline, the lesser we say, the better it is!!
In those years, I must have worked on an average 14 hours a day and no jokes, at least 325 days in a year!!
Many a times, I failed to produce the desired results. Many a times, it was frustrating!! The words like well done, good job, keep it up, etc. were hard to come. I had to learn every aspect of the business and at a speed that will match with theirs. I could have easily left and gone but I decided to hold on. Since, it was difficult to manage the bosses, I started managing my colleagues with better understanding. I remember, one night I couldn’t sleep and kept of thinking whether I am the same boss to my juniors what my bosses are to me??? I think that night was a Eureka moment!!! I didn’t sleep the whole night did complete analysis of my behavior with my colleagues. I started thinking the way my juniors must be thinking about me. I feel that was the day, I conquered!!!
Rate of Interest
It’s very simple. If your home loan is at 9% when you signed up, now with immediate effects it should become 8.25%. When I was talking to few friends with home loans, only one of them confirmed the full reduction of 0.75%. There is a possibility that banks may not pass full benefit to the consumers though RBI and the Government will look into this issue seriously.
EMI Holiday
It also means you don’t need to pay EMIs for three months.
There is a confusion, as to which EMIs? I mean, is it for the month of March, April and May or April, May and June.
Please note that the banks generally will ask you about the date of the EMI and in general they would agree to a date picked by you. One of my friends told that his EMI was promptly debited on 25th March, (note RBI announced measures on 27th March 2020). In nutshell, you will get EMI holiday for 3 months and that will in most of the cases April, May and June 2020.
What happensduring the EMI holiday months?
Postponement of EMIs doesn’t mean that the interest won’t accrue; you will still pay interest on the outstanding principal. Only benefit is that you don’t have to pay EMI and non-payment of EMIs won’t affect your credit score.
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