Borrowers say EMIs debited towards loans despite them opting for 3-month moratorium

Many borrowers such as flat buyers, businessmen and automobile owners in Noida and Greater Noida have written to the ministry of finance, highlighting the banks’ non-compliance, but no action has been taken so far.

Banks are debiting equated monthly instalments (EMIs) towards home loans, business loans and auto loans even from those customers who had availed of a three-month moratorium on all such payments, a reprieve announced by the Union ministry of finance in view of the Covid-19 pandemic and the 21-day nationwide lockdown imposed to prevent its spread.

On March 27, the ministry of finance had suggested to the Reserve Bank of India (RBI) a moratorium on all loan repayments, and the interest entailed, for three months. (Getty Images/iStockphoto)

Many borrowers such as flat buyers, businessmen and automobile owners in Noida and Greater Noida have written to the ministry of finance, highlighting the banks’ non-compliance, but no action has been taken so far.

On March 27, the ministry of finance had suggested to the Reserve Bank of India (RBI) a moratorium on all loan repayments, and the interest entailed, for three months. Consumers were informed by their respective banks that they have an option to either apply for the moratorium or continue to pay. The moratorium was suggested in view of the economic hardships suffered by many due to the complete lockdown of offices and businesses.

“My private sector bank allowed me my request for a three-month moratorium on my home and auto loans and acknowledged the same via a text message. But even then, the EMI was debited for the month of April from my account. The government must act against such banks to ensure that they follow the government guidelines. We tried to contact the bank but we got no help,” Pushpendra Singh, a resident of Sector 135 and an employee of a private firm, said.

“I had taken four business loans from four different private banks. I applied for the moratorium because I hardly have any savings in my account at present. I got a message from all four banks that my moratorium request has been approved. But now all four banks have debited instalments from my accounts. If the lockdown continues beyond the 21 days, then I will have no money to even buy essential items like milk and vegetables,” Shekhar Mahajan, a resident of Exotic housing society in Sector 16, Greater Noida West, said. Mahajan said he recently started a business dealing in AC spare parts and it is now shut owing to the lockdown.

“If the customer has applied for moratorium and the bank has accepted the same, then the EMI should not be deducted. But in cases where it has been debited, customers are advised to visit the respective branches for clarity as to how that happened. It may be some technical issue. They can file a complaint in writing with the bank and also bring it to our notice. We will look into this issue,” Ved Ratan, lead bank manager, Gautam Budh Nagar, said.

Many said the banks are also charging interest on the postponement of EMIs.

“As all business activity is shut and income has suddenly stopped, banks should not be charging interest for the moratorium period. The government must address this issue and allow us a six-month moratorium and waive the interest for this period,” Indrish Gupta, founder member, Noida Extension Flat Owners welfare Association, said.

When contacted, a ministry of finance official said the RBI would look into such cases.

“The RBI handles private sector banks and it is looking into such issues. We have made it clear to all banks that they should not force people to repay loans during the moratorium period if they decide to avail of the reprieve. Public sector banks will accept repayment of loans only if a consumer decides to pay willingly,” Debashish Panda, finance secretary, department of financial services, said.