What is EMI Holiday and 3 Months Moratorium announced by RBI in March 2020?

EMI Holiday or Moratorium Period refers to the time period during which an individual need not pay an Equated Monthly Installment (EMI) on the loan taken by him or her. EMI is a fixed amount paid by the borrower to a lender or bank at a specified date on every month. This article throws light on reasons behind Government decision to announce EMI holiday and the measures announced under this moratorium.

Aspirants would find this article very helpful while preparing for the IAS Exam.


In light of the current humanitarian crisis caused by COVID-19, India had gone under first phase of lockdown for 21 days, which was announced by the Prime Minister of India in the month of March. This unavoidable precautionary measure taken by the Government to save lives has resulted in huge economic losses especially to self-employed individuals which has made it difficult for them to repay the loans. Hence the Finance Ministry asked the Central Bank, RBI suggesting a moratorium on EMI, for a few months.

What are the Measures Announced by RBI on March 27th 2020 to tide over the COVID-19 crisis?

For providing economic respite to many people, RBI has announced measures on March 27, 2020, which are listed below.

  1. There will be a 3 months moratorium on repayment of loans, it means borrowers need not pay loan EMI installments for a period of 3 months.
  2. As per this new RBI directive, EMI would not be deducted from the individuals banks account.
  3. Borrowers credit will not be downgraded.
  4. Risk classification of the loan will not be affected.
  5. There will not be any financial penalties.
  6. There will not be any increase in interest rates.
  7. There won’t be any change in the terms and conditions of the loan.
  8. All the banks and Non Banking Financial Companies (NBFC) are permitted to execute the above rules on repayment of term loans outstanding on 1st March, 2020.


The above details would help candidates prepare for UPSC 2020.

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