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<ul><li><keyword id="6354730" type="General" weightage="20" keywordseo="home-loan" source="Orion">Home loan</keyword> borrowers would most likely end up paying higher EMIs as a further tenure extension may not be possible. </li><li>EMI for a 20-year home loan of ₹70 lakh is set to go up by ₹1,138. </li><li>Home loan borrowers should plan in a structured manner so that their finances are not stretched, say experts. </li></ul>While the budget did not bring much cheer to home loan borrowers, Wednesday’s 25 <a href="https://www.businessinsider.in/finance/news/rbi-hikes-interest-rates-by-25-basis-points-to-6-5-says-core-inflation-remains-sticky/articleshow/97716217.cms">basis-point rate hike</a> by the RBI will only add to their woes. When RBI raises interest rates, lending institutions also increase their interest rates and home loans get costlier for borrowers. However, the impact will be most felt by those who already have a home loan. Says Ram Raheja, managing director at S Raheja Realty, a real estate developer, “The policy rate was raised by the RBI by 25 basis points to 6.5%, we believe that this will be followed by a protracted period of waiting and watching. Most banks have already hiked house loan rates by about 200 basis points on borrowers as of this writing. The effects of the higher policy rates would be felt most quickly by current home loan borrowers.” What it means for you: “Repo rate is directly linked to loan rates offered by lenders so an increase in the repo will increase the borrowing cost and vice-versa. The rate hike of 25 bps today will make EMIs expensive by approximately 2-4%. Borrowers will either have to shell out extra money to repay their loans or will have to extend the loan tenure,” says Swaminathan, executive chairman, Andromeda Sales and Apnapaisa.com, a home loan aggregator. If we take into consideration the current increase of 25 bps, the EMI for a 20-year home loan of ₹70 lakh at 9.25% was ₹64,111. But when we factor in the 25 bps rise, the interest rate becomes 9.5%, thereby increasing the EMI to ₹65,249. The borrower of such a loan will have to pay an extra amount of ₹1,138 each month. However, in the last three quarters, the repo rate has been increased by 250 basis points. So, the EMI for a 20-year home loan taken in May 2022 of ₹70 lakh at 7% was ₹54,271. But when we factor in the 250-bps hike rate since May, the interest rate becomes 9.5%, increasing the EMI to ₹65,249. The borrower of such a loan will have to pay an extra amount of ₹10, 978 each month. Let us take another example of a loan of ₹50 lakh with a tenure of 15 years which was taken last year before May. Then the interest rate was 7% and the EMI for such a loan was ₹44.941. Now, the EMI for the same loan would be ₹52,211. Before this rate hike the EMI was ₹51,460. Borrowers who want to keep the EMI the same can look to increase their tenure. For the above loan, the tenure will have to be increased to 270 months from the original 180 months to keep the EMI the same. Before this rate hike, the tenure had to be 254 months to keep the EMIs the same. However, increasing the tenure means that the borrower has to pay an additional interest of ₹40.41 lakh (as compared to a 7% interest rate) and of ₹7.18 lakh as compared to when the interest rate was 9.25%, before the current rate hike. Explore different options and plan accordingly: However, Anuj Sharma – chief operations officer – IMGC, a mortgage guarantee company says that with the current rate hike, banks’ ability to assist is limited (as loan term extensions have already been exhausted), and the increase would eventually be passed on to borrowers, increasing the monthly payments. Agrees Pramod Kathuria, founder &amp; CEO, Easiloan, a digital home loan marketplace, “For the home loan, the banks have typically a tenure of up to working age of 60 years, hence increasing the tenure might be challenging given the number of hikes in the recent months. In this case, the bank can opt to increase the installment.” “When the window to increase home loan tenures closes, it means that borrowers will not have the option to extend the repayment period for their home loans. This could put pressure on the more budget-strung borrowers' finances, especially if their income has not increased proportionately,” said Prashant Thakur, senior director and head of research at Anarock group. Borrowers would need to check with the bank to find out what options they have. Borrowers can also try to negotiate with the banks, provided a they have a good credit history How to manage a higher EMI outgo: Adhil Shetty, CEO, BankBazaar, a loan aggregator, says that one should rush into breaking their investments and making prepayments and instead plan accordingly. “You can do it in different ways depending on what suits your financial situation best. For instance, a 20-year loan can be repaid in 12 years if you pre-pay 5% of the loan balance once a year. Else, you could pay an additional 5%-10% over your existing EMI every month. Or you could pay an additional 2-5 EMIs every year or an additional EMI every quarter. Any and all of this would bring down your loan burden,” says Shetty. Above all, what matters is the timeframe in which you intend to repay the loan. For example, your intention was to repay a 20-year loan in 10 years but the rate hikes have taken your tenor to 25 years. In this case, ensure that for the next 10 years, you pay back at least 10% of the loan through a combination of EMIs and prepayments. This will keep you on track for your goal. What is important is that you do it in a planned and structured manner, so that your finances are not stretched but you make savings on your loan at the same time. ‘’More importantly, home loan borrowers whose EMIs have gone up significantly since last year, will have to manage their finances so that they can meet the increased EMI payments. If the borrowers are unable to make the higher payments, it can result in a bad credit score, which might lead to getting loans in future becoming even tougher,” said Atul Monga, co-founder and CEO, BASIC Home Loan, an automated home loan platform. High home loan rates should not be a deterrent to home purchase: “The magnitude of the increase in the current is 25 basis points which is less compared to previous hikes, this could potentially mean that RBI is expecting inflation with the target of 4%, post which the repo rate can be normalized. The home loan is a long-tenure loan and it is expected to go through multiple cycles of highs and lows, hence the recent hike should not deter the new home loan borrowers from purchasing,” says Kathuria. New borrowers should instead focus on a sound repayment strategy to cope up with the changes in the increase in the interest rate. SEE ALSO <a href="https://www.businessinsider.in/finance/news/rbi-hikes-interest-rates-by-25-basis-points-to-6-5-says-core-inflation-remains-sticky/articleshow/97716217.cms">RBI hikes interest rate by 25 bps to 6.5%, says core inflation remains ‘sticky’</a> <a href="https://www.businessinsider.in/finance/news/india-to-grow-at-6-4-in-fy24-says-rbi-projects-fy23-growth-rate-at-7/articleshow/97722702.cms">India to grow at 6.4% in FY24 says RBI, projects FY23 growth rate at 7%</a>

Don't be in a hurry to prepay but plan EMIs better, say experts as home loan burden set to rise

<ul><li>The Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report.</li><li>On Sunday, the National Disaster Management Authority (NDMA), the nodal department, announced lockdown 4.0 till May 31 to check the spread of the novel coronavirus </li><li>In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020. </li></ul>With the government extending the nationwide lockdown up to May 31, the Reserve Bank of India (RBI) is likely to extend the moratorium on repayment of loans for three more months, according to an SBI research report. On Sunday, the National Disaster Management Authority (NDMA), the nodal department, announced lockdown 4.0 till May 31 to check the spread of the novel coronavirus. The lockdown was first announced by Prime Minister Narendra Modi on March 24 for 21 days in a bid to combat the COVID-19 pandemic. It was first extended till May 3 and again till May 17. In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020. "With the lockdown now extended up to May 31, we expect RBI to extend the moratorium by three months more," SBI's research report- Ecowrap said. The report said the moratorium for three more months will imply that companies need not pay till August 31, 2020, and this means that there is almost minimal possibility of companies being able to service their interest liabilities then in September. Failing to repay the interest liabilities will mean the account might be classified as non-performing loans as per the RBI norms. "Thus, the RBI needs to give operational flexibility to banks for a comprehensive restructuring of the existing loans and also a reclassification of 90 day norm," the report said. The RBI's June 7 circular is stringent and gives little flexibility to banks. "The revised restructuring norms should give banks to restructure like say converting interest liabilities up to March 2021 into term loans, repayable in 3-5 years for working capital and at the end of the tenor in case of term loans," the report said. RBI also needs to also clarify whether working capital expansions classify as COVID-19 debt, it said.

RBI may extend moratorium on repayment of loans for three more months: Report

<ul><li>Borrowers have not had to pay bigger EMIs thanks to extended <keyword id="6360217" type="General" weightage="20" keywordseo="loan" source="Orion">loan</keyword> tenor until now, but that may change. </li><li>If borrowers push for longer tenors even after the extensions taken due to the last four rate hikes, it will result in the loan becoming negatively amortised. </li><li>Negative amortisation is when original EMIs cannot cover the loan principal which will increase every month. </li></ul>Indian <keyword id="6371902" type="General" weightage="20" keywordseo="home-buyers" source="Orion">home buyers</keyword> who have been paying back lenders through equated monthly instalments (EMIs) are in for a rude shock as the Reserve Bank of India (RBI) raised a key interest rate for the fifth time this year to 6.25% on Wednesday. Experts say, now, lenders will have to bump up monthly payouts. While the quantum of the central bank’s hike was lower than the last three increases – at 35 basis points as opposed to 50-basis point hikes earlier,<a href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-35-bps-taking-rates-to-a-high-of-6-25/articleshow/96045841.cms"> the sharp rise in interest rates in the last seven months </a>will increase the <keyword id="6357050" type="General" weightage="20" keywordseo="emi" source="Orion">EMI</keyword> burden extensively. Moreso because those borrowers who have been avoiding a bigger EMI in lieu of an extended loan tenor until now, have exhausted this option. Shrikant Shrivastava, chief risk officer, at India Mortgage Guarantee Corporation said that most banks have fully passed on the repo rate increase of 190 bps – in the last four rate hikes – to the consumers of home loans, till date. With the latest rate hike, he expects EMIs to go up further by another 3-5%. “This rate hike of 190 bps has resulted in a loan tenor increase of around 13 years for borrowers who had initially opted for a 20 years loan period, assuming they had taken a <keyword id="6354730" type="General" weightage="20" keywordseo="home-loan" source="Orion">home loan</keyword> at 6% at the time of home purchase. Alternatively, those borrowers who opted for an EMI increase instead of a loan tenor increase have seen their EMI go up by around 20% already,” said Shrivastava. Current home loan borrowers, who have had their home loan original interest rate at 10-11% and initial <keyword id="15721223" type="General" weightage="20" keywordseo="loan-tenors" source="Orion">loan tenors</keyword> above 25 years — will have no option but to increase their EMIs. Any attempt to increase loan tenor further, would result in the loan becoming negatively amortised. Negative amortisation is when the EMI is unable to cover the monthly interest payment – it means that every month, the loan principal goes up instead of going down, in spite of payments. That would result in the loan ballooning over the long term, making it expensive for the borrower. Here is how much your interest rate will go up Anuj Puri, the chairman of Anarock Group believes that the rate hike is a set back for new and old borrowers both, as borrowers will have to shell out more per month as EMIs. “Soon, banks and lending institutions will follow suit with today’s repo rate hike and increase their marginal cost of fund-based lending rates (MCLR). For existing borrowers, their EMI will be revised at the reset date of their loans,” Puri said. As the rate of interest is hiked by 0.35% and if it is passed on to the consumer by the banks, then the EMI of a loan of ₹10 lakh taken at 8.5% for ten years will increase by around ₹300 per month, said Atul Monga, chief executive and founder of Basic Home Loan. Similarly, for a ₹50 lakh loan outstanding with a bank at a 10% interest rate spread across 20 years, the effective EMI would be ₹48,251. After the rate hike is passed on, the new EMI would be about ₹49,249 – a monthly increase of ₹998. “To deal with the impact of a higher interest rate, it is important to maintain good credit, research the best rate offers, and consider refinancing existing loans to lower the monthly payments. Customers can also opt for long tenures or switch to a floating rate of interest," Monga said. A few real estate consultants, however, believe that the rate at which banks will pass on the interest rate hike might not be as much. “The rise in policy rate leads to an increase in lending rates, which impacts the sentiment of stakeholders. However, the moderation in repo rate hike augurs well for the real estate sector as its pace has slowed down even as the resultant transmission to end-users is likely to be delayed or moderated by the banks,” said Samantak Das, chief economist, and head of research at JLL India. SEE ALSO <a href="https://www.businessinsider.in/finance/news/rbi-downgrades-fy23-gdp-growth-projections-to-6-8-percent/articleshow/96047963.cms">RBI downgrades FY23 GDP growth projections to 6.8% - lower than World Bank and other global agencies</a> <a href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-35-bps-taking-rates-to-a-high-of-6-25/articleshow/96045841.cms">RBI hikes repo rate by 35 bps, taking it to 6.25% – Das says bank has ‘Arjuna’s eye’ on inflation</a>

Be prepared to pay higher EMIs: No room for loan tenor increase after RBI’s latest rate hike

<ul><li>In the last two years, interest rates on loans have gone up by 1.9% – undoing the <keyword id="6357050" type="General" weightage="20" keywordseo="EMI" source="Orion">EMI</keyword> mathematics of most borrowers. </li><li>Most experts predict that there are more rate hikes coming as early as December. </li><li>For auto and <keyword id="35519" type="General" weightage="20" keywordseo="home-loans" source="Orion">home loans</keyword>, borrowers can consider extending their tenures if the burden is higher. </li></ul>Be prepared to pay more interest if you want to borrow to buy a home or a car. The era of low interest rates has formally ended, with the Reserve Bank of India kicking off its rate hike cycle in May. The repo rate or the rate at which central banks lend to banks has risen by 1.9% after four consecutive hikes. That means EMIs will only go up making it costlier for borrowers. While existing borrowers of home loans may see their tenures go up, equated monthly installments (EMIs) of personal loans and <keyword id="35527" type="General" weightage="20" keywordseo="auto-loans" source="Orion">auto loans</keyword> will rise further after today’s 50 basis point rate hike. "The Reserve Bank of India has hiked the repo rate by 50 basis points. This marks the fourth consecutive rise in the repo rate, bringing it to 5.9%. This will definitely impact the new and existing borrowers. However, this decision has been made to curb the rising inflation. With India’s inflation rate being 7%, the value of the currency might fall without the intervention of the RBI in order to try and sustain it and bring it down," said HP Singh, chairman &amp; managing director of Satin Creditcare Network. Home loans Let’s look at home loans first. If you have ₹50 lakh outstanding with a bank at an 8.5% interest rate spread across 20 years, the effective EMI you have is at ₹43,391. However, if the 50 basis point hike is passed on to the loan, the EMI will go up to ₹44,986 – an effective increase of ₹595 per month. For every one lakh of home loan for this tenure, the EMI will go up by ₹32. Auto loans The net impact is different for auto loans where the tenures are shorter but interest rates are different. For example if you have a ₹10 lakh auto loan at around 8.6% interest rate for a tenure of seven years, your EMI has been at ₹15,887. Again, in the changed interest rate regime, it would come up to ₹16,140 every month – an effective increase of ₹253. For every lakh of an auto loan for the said tenure, the EMI will go up by ₹25. Personal loans For a personal loan that’s spread across two years, the EMI for a ₹3 lakh loan at 11.4% would be at ₹14,038. After an interest rate reset, it would go up to ₹14,108 — an effective increase of ₹70. Increasing loan tenure? In the last two years, interest rates on loans have gone up by 1.9% – undoing the EMI mathematics of most borrowers. For auto and home loans, borrowers can consider extending their tenures if the burden is higher. However, it is to be noted that extending tenures will increase the interest payable across the years — and especially for large loans like home loans, the net payable will balloon correspondingly. The other factors that play a role in tenure extension would be the borrower’s age – while younger borrowers can afford it, most people must clear off long term loans before retirement age of 60. More hikes ahead? When he announced the rate hikes today, RBI governor <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> said that the consumer price inflation is still above the central bank’s tolerance level. “Going forward, the RBI will remain vigilant, agile and nimble in its liquidity management operations and would use all instruments at its disposal to mitigate the spillovers of global financial market volatility on domestic financial markets,” said Das. It means going ahead, there could be more rate hikes on the horizon and a lot of experts predict that too. “We continue to expect another 35 bps hike in December followed by a pause with the RBI assessing Fed actions, and impact of past rate hikes on domestic growth and inflation,” said Suvodeep Rakshit, senior economist at Kotak Institutional Equities. Those who have banked on low interest rates offered during the pandemic to take home loans, might have to adjust their monthly math — but the burden of growing interest is what most people across the world have been dealing with and partial prepayments will help if it can be afforded. Since more rate hikes might be coming, it would be a good idea to pay off personal loans if possible as they can get costlier. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/markets-shrug-off-50-bps-salvo-by-the-reserve-bank-of-indias-as-hike-largely-priced-in/articleshow/94550783.cms">Markets shrug off 50 bps salvo by the Reserve Bank of India’s as hike largely priced in</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tata-tigor-ev-vs-tata-tiago-ev-comparison-of-price-and-features/slidelist/94551771.cms">Tata Tigor EV vs Tiago EV - which one should you buy?</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/presidential-commission-recommends-stamping-of-h-1b-visas-inside-us/articleshow/94551768.cms">Presidential commission recommends stamping of H-1B visas inside US</a>

Here is how much your EMI will go up after the recent repo rate hike

New Delhi, May 22 () Hours after the Reserve Bank of India (RBI) extended the moratorium on repayment of loans for three months on Friday, Union minister Hardeep Singh Puri said this step will offer relief to aviation sector companies like airports, airlines and ground handlers and help them improve their cash flow position. The aviation sector has been hit hard due to the coronavirus-triggered lockdown. Consequently, during the last few weeks, all Indian airline companies have either fired employees, sent them on leave without pay or cut their salaries. "The RBI announcement to permit lending institutions to extend the previously announced moratorium by another 3 months, i.e., from June 1, 2020 to August 31, 2020 in view of further extension in the lockdown offers relief to civil aviation stakeholders," Puri said on Twitter. "These announcements will also benefit aviation sector companies, including airports, airlines, freight operators, ground handlers, MRO (maintenance, repair and overhaul) etc., who have availed such term loans &amp; will enable them to improve their cash flow position," he added. All scheduled commercial passenger flights have been suspended in India since March 25, when the Modi government imposed the nationwide lockdown to curb the spread of the deadly virus. Earlier this week, Civil Aviation Minister Puri had announced that domestic passenger flights will resume in a calibrated manner from May 25. The RBI on Friday unexpectedly slashed benchmark interest rates to their lowest levels since 2000 and extended the moratorium on repayment of loans for three months to ramp up support for the economy, which is likely to contract for the first time in over four decades. DSP KJ

RBI's extension of moratorium on repayment of loans will help aviation companies: Puri

<ul><li>The Reserve Bank of India (RBI) is looking at the one-time restructuring of all loans, which includes personal loans as well. </li><li>Provided you didn’t default on your loans as of 1 March 2020, you can apply to change the payment plan on your loan. </li><li>RBI has set a deadline of 1 December 2020 for all restructuring requests to be put into play and implemented within 90 days of being invoked. </li></ul>Car loans, home loans, or any kind of personal loan that you couldn’t make the payments on are now eligible for restructuring. The Reserve Bank of India (RBI) announced that it will open up a window for a one-time <keyword id="444301" type="PERSON" weightage="20" keywordseo="restructuring-of-loans">restructuring of loans</keyword> — all loans — that were impacted by COVID 19. <div type="image" title="Overall exoposure" msid="77392046" hostid="261" caption="&amp;lt;p&amp;gt;Loans under moratorium with banks across India as a percentage of total outstanding loans &amp;lt;/p&amp;gt;"></div> This means that you’re struggling to pay off your personal loans, you can ask the bank to modify the terms of repayment, get additional credit to rebuild or even extend the moratorium period. The minimum credit requirement is that you should not have defaulted on your loan payments as of 1 March 2020 or within 30 days of that day. The outstanding amount of debt at that point of time will be considered for restructuring. You have till 31 December to push for a new payment plan As per the RBI’s circular, resolution under the new mechanism has to be invoked by 31 December 2020. Once invoked, it must be implemented within 90 days. However, RBI suggests that banks and other lending institutions should try and kick off their plans earlier than the due dates. The resolution could include the following features: <ul><li>Rescheduling of payments </li><li>Conversion of interest accrued into another credit facility </li><li>Granting of moratorium </li><li>Modification of overall tenor of the loan </li></ul>The terms and conditions of how this will be determined depending on your projected income streams over the next two years. Provided the restructuring plan is put in place within the stipulated timeline, then your loan will not be classified as a non-performing asset (NPA). However, if that is not the case then rating of the loan will be done as per the borrower’s actual performance. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-brings-in-kv-kamath-to-set-the-boundaries-for-a-one-time-restructuring-of-these-loans/articleshow/77388568.cms">RBI brings in KV Kamath to set the boundaries for a one-time restructuring of loans</a> <a href="https://www.businessinsider.in/finance/news/rbi-governor-shaktikanta-das-leaves-repo-rate-unchanged-to-check-inflation/articleshow/77387591.cms">‘Watchful’ RBI leaves repo rate unchanged to keep inflation in check</a> <a href="https://www.businessinsider.in/finance/news/rbi-has-opened-a-pipeline-of-funds-for-startups-home-buyers-and-green-power-producers-too/articleshow/77388903.cms">RBI has opened a pipeline of funds for startups, home buyers and green power producers too</a>

If you have a bank loan that you are unable to pay, restructuring is on its way

<ul><li>The Reserve Bank of India’s (RBI) Monetary Policy Meeting (MPC) is currently underway and it has some tough decisions to make.</li><li>It needs to decide between meeting its inflation-targeting mandate and making sure there’s still liquidity in the market. </li><li>The RBI also needs to figure out where another moratorium or a one-time restructuring of loans across all sectors will be better for businesses.</li></ul>The Reserve Bank of India (RBI) is set to announce its policy rate decision tomorrow, and this time around, the situation is more uncertain than usual. From meeting its inflation mandate to keeping money circulating in the economy to dealing with loans — RBI’s policy decision could set the tone for how the apex bank expects the next few months to go. The moratorium conundrum Many banks and industry experts are of the opinion that another moratorium on loan repayments is not required going forward. The RBI first announced a three-month moratorium from March to May then extended the limit to August 31 leading to a lot of uncertainty when it comes to a bank’s balance sheets. Private and public sector banks alike have been shoring up provisions to deal specifically with COVID related accounts, over and above the RBI’s mandate. <div type="image" title="Provisions in Q1" msid="77365771" hostid="261" caption="&amp;lt;p&amp;gt;Provisions across major Indian banks in Q1&amp;lt;/p&amp;gt;"></div> SBI chairman Rajnish Kumar told the <a href="https://economictimes.indiatimes.com/news/economy/policy/government-and-corporates-need-to-invest-more-for-recovery-sbi-chairman-rajnish-kumar/articleshow/77358404.cms">Economic Times</a> that the moratorium has achieved its limited purpose and can now be done away with. “What the RBI can do is if the bank is satisfied with the intent of the borrower and normalisation in cash flows, it can give some relief,” he said. The call for one-time restructuring Rather than delay payments further, Indian industry leaders are suggesting that a one-time restructuring of all loans should be put on the table. Certain segments were already struggling before the coronavirus pandemic hit and others are wondering how to crack the ‘new normal’. <div type="Article" hostid="261" msid="77328145" title="One-time loan restructuring dilemma - RBI won’t commit, and India Inc won’t stop asking for it" mstype="2" mssubtype="0"></div> The RBI’s issue with restructuring loans has always been that it amounts to ‘deceptive banks’ — in the words of the former RBI governor Raghuram Rajan. Businesses, on the other hand, don’t want to be declared NPA in order to be restructured since that blocks incremental funding. For any of this to happen, banks need to be incentivized to pump more money into loans on the verge of collapse. RBI’s inflation-targeting mandate Former RBI Deputy Governor Viral Acharya <a href="https://www.moneycontrol.com/news/trends/current-affairs-trends/focus-on-inflation-over-growth-at-next-policy-review-meet-viral-acharya-to-rbi-5631091.html">believes</a> that the apex bank should ‘respect’ its core mandate and get inflation in India under control. But, it’s not a simple choice because of the relationship inflation shares with the repo rate. The RBI has slashed the repo rate twice in the last 4 months — once during the March MPC by 75 basis points (bps) and again in an off-cycle meeting in May by another 40 bps. 100 bps make up one percent and the repo rate is one of the instruments that the RBI has on hand to control inflation and spur growth. The rate currently stands at 4%. The repo rate and inflation share an inverse relationship. While dipping the repo rate further could make inflation worse, increasing it would make it more expensive for banks to borrow. The RBI is required to keep inflation in India between 2% to 6% as per its inflation targeting mechanism — or core mandate as Acharya put it. In the last six months, the RBI has missed its range exceeding 6% inflation each quarter. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Month </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rate of Inflation </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Quarterly average </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Jan </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.59% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Feb </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.58% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">March </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.84% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.67% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.22% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">May </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.27% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">June </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.09% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.51% </td></tr></tbody></table> If the RBI fails to keep inflation within tolerance levels this quarter as well, it will technically constitute a failure of the monetary policy. Following which, RBI will be required to send a report to the central government explaining why the situation occurred and the remedial measures to fix it. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/axis-bank-finalises-10000-crore-share-sale-to-raise-funds-at-a-floor-price-of-442-19/articleshow/77354177.cms">Axis Bank finalises ₹10,000 crore share sale to raise funds at a floor price of ₹442.19</a> <a href="https://www.businessinsider.in/finance/banks/news/one-time-loan-restructuring-dilemma-rbi-wont-commit-and-india-inc-wont-stop-asking-for-it/articleshow/77328145.cms">One-time loan restructuring dilemma - RBI won’t commit, and India Inc won’t stop asking for it</a> <a href="https://www.businessinsider.in/finance/news/depressions-and-recessions-differ-in-their-severity-duration-and-overall-impact-heres-what-you-need-to-know-/articleshow/77289455.cms">Depressions and recessions differ in their severity, duration, and overall impact. Here's what you need to know.</a>

Three things the RBI will have to mull over as it gets ready to announce its monetary policy decision

<ul><li>Reserve Bank of India (RBI) governor has extended the moratorium for repaying terms loans by another three months. </li><li>This includes retail loans like those taken out for cars, home and education, along with corporate loans. </li><li>This means that the total amount of interest across these six months will only be due after the expiry of the deferment period on August 31.</li></ul>RBI governor <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword> announced some more relief for borrowers by extending the <keyword id="9266253" type="UNKNOWN" weightage="20" keywordseo="moratorium-on-loan-repayments">moratorium on loan repayments</keyword> by another three months. Now they will have will August 31 to meet their repayment requirements. <div type="Article" hostid="261" msid="75883601" title="Reserve Bank of India cuts interest rates to the lowest in over 2 decades⁠ as the central bank expects the GDP to contract this financial year" mstype="2" mssubtype="0"></div> “In view of the extension of the lockdown and continuing disruptions on account of COVID-19, the earlier measures are being further extended by another three months from 1 June till 31 August,” said Das. This includes paying my loans across the board, including retail loans on cars, homes and education. “This will allow borrowers to manage their finance and manage their cash flow in a gradual manner,” he added. This brings the total moratorium periods to six months, from 1 March to 31 August. This means that the total about of interest across these six months will only be due after the expiry of the deferment period. <div type="Article" hostid="261" msid="74841767" title="No EMI payments for home, car, and corporate and other loans for 3 months says RBI" mstype="2" mssubtype="0"></div> According to Das, this will help further ease the stress caused by coronavirus pandemic and the ongoing lockdown by providing relief on debt servicing and improving access to working capital. Under normal cicircumstances, the deferment of loan repayments has an impact on the borrower's credit history and risk classification. This can make it difficult to get other loans later on. However, with a moratorium in place, the borrower's credit rating will not be adversely impacted in any way. "The rate cuts combined with the further extension of loan moratoriums by 3 months up to August 31, 2020 augurs well for the real estate sector in the times to come," said Anuj Puri, Chairman of Anarock Property Consultants. "Home loan interest rates have already gone down substantially over the last year, and are presently at an all-time low averaging between 7.15% to 7.8%," he added. Most banks are not making the deferment automatic instead giving borrowers to choice to opt-in. While some have made the option available online, others will have to call up their banks in order to inform them that they wish to delay their repayment, especially in cases where the loan repayment is cut automatically from their associated account. Finance Minister Nirmala Sitharaman, in her slew of announcements last week, had provided indirect relief for the common man by deferring the filing of income tax returns till 30 November 2020. <div type="Article" hostid="261" msid="75717906" title="Deadlines for tax returns deferred⁠— and other tax reliefs announced by Nirmala Sitharaman" mstype="2" mssubtype="0"></div> SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/rbi-news-reserve-bank-of-india-governor-shaktikanta-das-cuts-interest-rates/articleshow/75883601.cms">Reserve Bank of India cuts interest rates to the lowest in over 2 decades⁠ as the central bank expects the GDP to contract this financial year</a> <a href="https://www.businessinsider.in/defense/news/india-china-point-fingers-for-border-issues-along-lac/articleshow/75883231.cms">‘Not accurate’ and ‘nonsense’ — India and China in a war of words in New Delhi while flexing muscles across the Ladakh border</a>

You Searched For "extension of rbi loan moratorium" and got 8 results

Don't be in a hurry to prepay but plan EMIs better, say experts as home loan burden set to rise

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RBI may extend moratorium on repayment of loans for three more months: Report

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Katya Naidu

RBI's extension of moratorium on repayment of loans will help aviation companies: Puri

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If you have a bank loan that you are unable to pay, restructuring is on its way

Prabhjote Gill

Three things the RBI will have to mull over as it gets ready to announce its monetary policy decision

Prabhjote Gill

No EMI payments for six months as RBI extends moratorium on loans repayments till August 31

Prabhjote Gill

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