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What is Loan EMI Moratorium? Know The Impact of Moratorium!

Published on May 21, 2020Updated on Jan 29, 2024

What is Loan EMI Moratorium? Know The Impact of Moratorium!

The COVID-19 Pandemic has caused an upheaval in various aspects of life. The Government is releasing a slew of measures to tide over this crisis. In order to help borrowers who are facing financial stress due to the lockdown, the Reserve bank of India and has announced a moratorium on loans, which has been extended by banking and financial institutions to their customers.

What is Loan EMI Moratorium?

When one takes a loan from a financial institution – one receives a lump sum amount which has to be repaid back in monthly instalments – known as EMI (equated Monthly Installments).  This Loan EMI must be paid back every month on or before the scheduled date and any delay or default in paying these EMI's results in late fees, penalty charges as well as a negative impact on your credit score.

So what does Moratorium mean for you? It means that you are given a period of time – where you need not make your monthly  EMI payments and at the same time, not face any penalty charges or lowering of credit score. However, interest will continue to be accrued on the principal amount outstanding for the period. At SMFG India Credit, this is calculated based on simple interest on the outstanding amount.

The RBI Moratorium has been extended to all eligible SMFG India Credit customers. Customers who want to avail this optional moratorium period can apply here.

Advantages & Disadvantages of EMI Moratorium

Advantages of EMI Moratorium

  1. Avoiding cash crunch: This moratorium facility may well prove to be a major relief to those whose cash flow situations have been drastically impacted by the current COVID crisis and consequent lockdown.
  2. Allowing diversion of scarce funds to essential expenses: For many, the monthly EMI comprises a major part of their monthly expenses and if their monthly income has stopped or businesses massively impacted – the moratorium offers a respite from a financial crunch or a tough cash flow situation.

Disadvantages of EMI Moratorium

  1. Increased EMI or Loan Term Period – Since the interest will continue to be accrued on the principal amount outstanding during the moratorium period, either your EMI will rise or your loan tenure will get extended. This may be a considerable amount, depending on the quantum of loan and rate of interest.
  2. In some cases, both EMI amount and tenure may get extended.

Thus, If you can afford the payment of your EMI’s and it is not causing financial strain to you – then it may be a good idea to continue discharging your liability for the same.

Must Read: How to Apply For Loan EMI Moratorium

Moratorium EMI Calculator

If you are still unsure about whether or not you should opt for a moratorium facility then a simple way to quantify your increased expense will be to use SMFG India Credit’s online Moratorium EMI calculator. The Moratorium EMI calculator enables you to calculate your new interest expense or new term period by entering in very simple details of your loan.

You may enter in the Loan Amount, the Rate of Interest, the term or tenure of the loan, the number of instalments that have already been paid by you and lastly – the number of months you want the moratorium for.

You can opt to keep the EMI amount the same after the moratorium period or you may opt to keep the Term period the same.

On entering these details, you will be able to see the new EMI amount or the tenure and can make a well-informed decision about the additional cost you will have to bear to obtain the moratorium facility. Please do note however that:

  1. Insurance and other costs are not included in the EMI calculation.
  2. In some cases, both EMI and tenure will increase. The revised schedule will be communicated to you once your application for the moratorium gets approved. Please contact us to know more.

It is important for each and every borrower to go online and check the financial impact on them and after evaluating the pros and cons to actively opt for a moratorium or not. If you have several loans – then it may be a good idea to use the online moratorium EMI calculator and decide the loans for which you would like to avail the moratorium and the ones whose EMIs you would like to continue paying as per the original schedule.

How does one opt for the Moratorium with SMFG India Credit?

Once you have used the EMI moratorium calculator and have concluded that taking the moratorium facility is the best option for you, you will need to apply online for the same.

We will evaluate your application, and based on your eligibility, you may be granted the same. If yes, our customer care representative will get in touch with you to discuss further.
To know if you are eligible for the moratorium, please go through our moratorium policy or contact our customer care centre.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

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