1. What is moratorium?
Moratorium is temporary postponement of payment of instalments (and is not a waiver) for the period from Mar 01, 2020 to May 31, 2020. Interest due on the outstanding loan amount will be collected over the rest of the tenor.
2. Is moratorium compulsory?
The moratorium is optional. A borrower intending to avail the moratorium has to communicate with KFSL through email/phone/click on the website of KFSL on the Option “Avail Moratorium” and put a request for the same. As is mentioned in the RBI circular, KFSL reserves the right to grant such moratorium.
3. What is the period of such moratorium?
The moratorium may be granted for a period of three months starting from Mar 01, 2020 to May 31, 2020. All installments due within this period can be deferred.
4. What if the installment of March 2020 and April 2020 has already been paid?
Thanks for your payment of installment. However no refunds will be made in such cases. The maximum moratorium possible in this case is for all installments falling due between Apr 01, 2020/ May 01, 2020 and May 31, 2020.
5. How will the EMIs deferred will be collected?
Please remember that EMIs not paid during the moratorium period will be collected subsequently by extending the tenor. Also the interest due on the outstanding loan amount within this moratorium period will be capitalized (added back to the principal outstanding as on Jun 01, 2020) and new amortization schedule will be drawn with new tenor by keeping EMI same.
6. How will the interest accruing within the moratorium period be collected?
The interest due on the outstanding loan amount within this moratorium period will be capitalized and new amortization schedule will be drawn by keeping EMI same. Therefore the tenor will extend by more than 3 months.
Example: Let us assume the loan outstanding as on start of moratorium period is INR 10 Lacs and the rate applicable on the loan is 21% and the balance tenor is of 72 months. Then the interest will be calculated for the first month is INR 17500. This amount will get added to INR 10 lacs and new loan outstanding will be INR 1017500. The interest for the second month will be INR 17806. For the third month, new loan outstanding will be INR 1035306 and interest for the third month will be INR 18118, thus making the new loan outstanding as INR 1053424. Now the loan amount will be amortised and a new repayment schedule will be drawn with keeping EMI same to arrive at a new balance tenor. In the given example, the tenor will increase by approximately 9 months. This increase in tenor is due to the increase in loan amount as the interest in the moratorium period is added to the loan outstanding at the beginning of the moratorium period. Hence it is an additional interest cost to you.
7. How can I opt for the moratorium?
A borrower intending to avail the moratorium has to communicate with KFSL through email/phone/Click on the website of KFSL on the Option “Avail Moratorium” and put a request for the same. The contact details are given below.
8. Will the interest thus accrued be considered as non-payment?
No. EMIs not paid and interest accrued on the account and not paid (but capitalized) within the moratorium period will not be considered as event of default or delay. However this will apply only to borrowers who have opted for the moratorium.
9. Will the interest accrued and capitalized attract penal interest?
No. The interest accrued will be based on the ROI (rate of interest) agreed at the time of the loan disbursement. The interest thus accrued will only be added to the outstanding principal (capitalized) and hence the loan amount will increase. The increased loan will get amortized by keeping the EMI same. The penal interest during this period of Mar 01, 2020 to May 31, 2020 will not be levied. However if there was installment overdue as on Feb 28, 2020, the penal interest on these overdue will continue to accrue as per agreed rates.
10. Will my EMI change? Do I need to give a new mandate?
No, your EMI will not change but the balance tenure of the loan will change. However this tenure change is subject to being within the overall policy limits. In case of such scenario our relationship manager will contact you to make you understand the situation and collect a new mandate or instruments as the case may be.
11. How will this interest capitalization affect my balance tenure?
Balance tenure will depend on the loan outstanding, ROI (rate of interest) and balance tenor.
Example: A loan with original tenor of 36 months and balance tenor of 28 months, there will be increase of 4 EMI (instead of 3) months while a loan with original tenor of 84 months and balance tenor of 75 months can lead to increase of 6 EMIs (instead of 3).
12. Will there be bounce charges, late payment charges during the moratorium period?
No, there will be no bounce charges, late payment charges or any other charges levied during this period for installment falling due between Mar 01, 2020 and May 31, 2020.
13. Will the seeking of Moratorium by the borrower have an impact on their credit/bureau score?
The moratorium on payments will not qualify as a default for the purposes of supervisory reporting and reporting to Credit Information Companies (CICs)/credit bureau by KFSL. Hence, there will be no adverse impact on the credit history of the borrowers. Any delay in payments of dues/outstanding amounts payable after the expiry of the Moratorium for customers(s)/borrower(s) who had availed of the Moratorium will qualify for the purposes of reporting to Credit Information Companies (CICs)/credit bureau by KFSL.
14. Can I pay all three EMIs deferred together in June 2020?
As the tenure of the loans has been extended on account of the moratorium, the customer is required to pay the EMIs as per the revised schedule. However, the three months interest capitalized if you want to repay can be repaid in single tranche post June 2020 and no prepayment penalty is applicable on the same. Such payments can be made only in KFSL branch and contacting your RM. However for other pre payments the terms and conditions as per sanction will continue to be in effect.
15. If I have sufficient balance in my account and instalment of my loan(s) is due, will KFSL debit the EMI during this period?
Yes, if you have not opted in for the moratorium.
16. Do I need to submit any documents for availing of the Moratorium?
No, you can opt for the moratorium by clicking on the link shared with you by KFSL through (i) SMS or (ii) e-mail. You may also visit KFSL’s website.
17. Is it ok if I continue paying the EMIs rather than availing of the moratorium?
Yes, please continue to pay your EMI. If you do not have cash flow problem we urge you to pay the regular EMI to save the additional interest burden.
18. If I have not opted for moratorium, whether KFSL will debit interest and instalment during this period?
Yes, if you have not opted in for the moratorium, KFSL will debit installment from your bank account.
19. Do I need to do fresh documentation?
No, the acceptance of Moratorium through electronic mode either Website(www.karvyfinance.com) / Email is treated as acceptance of yours to the terms and condition of the moratorium. Non Payment of installment for the month of March to May 2020 also is taken as acceptance of yours towards moratorium. KFSL will send a revised repayment schedule to you. All other terms and conditions as per the sanction letter issued to you and agreement between KFSL and you remains valid and subsistent.
20. Which customers are not eligible?
- Customers who are NPA as on Feb 28, 2020
- Customers where KFSL has initiated SARFAESI/DRT or NCLT proceedings as on Feb 28, 2020
- Customers who are declared as SKIP, Frauds or willful defaulters
- KFSL reserves the right to deny moratorium to any customer for valid reasons