The government of India has launched several measures to help citizens deal with the economic blowouts caused by Coronavirus-lockdowns and restrictions. One such relief measure is the – moratorium on loan payments. The RBI has advised banks to offer customers a moratorium period for all loan repayments and credit card bills that fall between 1st March 2020 and 31st August 2020. Initially, the moratorium was provided only for three months up until 31st May. Now it has been extended till the end of August.  

In simple terms, borrowers who avail the moratorium offer do not have to pay EMIs or credit card bills during the moratorium. In this guide, you can find all that you need to know about Axis Bank EMI Moratorium – How to apply, advantages, disadvantages, and more. 

Overview of Axis Bank EMI Moratorium

Axis Bank offers an "opt-in" facility for customers. This means, if you wish to apply for the moratorium, you have to take action, by filling the online form. On the other hand, if you do not want to avail of the moratorium facility, you don't have to do anything.

Axis Bank EMI moratorium is available for all retail borrowers like personal loans, home loans, auto loans, two-wheeler loans, education loans, gold loans, loans against property, credit cardholders, and others. Besides retail loans, this facility is also offered for tractor loans, commodity loans, commercial vehicle loans, business loans, small business banking loans (overdraft and term loans), farmer loans (CC & OD), Kisan Credit Card (KCC), construction equipment loans, etc. 

How to avail Axis Bank EMI Moratorium? 

Axis Bank has sent out an SMS to all existing borrowers to opt for the EMI moratorium. You can click on the link mentioned in the SMS. You will be taken to a “Consent for Moratorium,” page on the Axis Bank website. If you have deleted the SMS by mistake or haven’t received it yet, you can find the consent form available on the official website of Axis Bank. 

  • Once you land on the consent form, you will have to provide your registered mobile number and enter the Captcha Code displayed on the screen. 

  • An OTP will be sent to your mobile number. Enter the OTP and click on Submit. 

  • You will be taken to the next screen where your name and customer ID will be displayed. Choose if you wish to opt for the moratorium for a loan or credit card.

  • Once you agree to the terms and conditions and click submit, you will receive a confirmation message stating that your request has been accepted. 

It's worth mentioning here that the moratorium is NOT a waiver. It's only a temporary postponement of your EMI instalments. Your outstanding principal will continue to accrue interest during the moratorium period. So, make sure to understand the pros and cons of this move before opting for it.

Additional Reading: Is Moratorium a Relief? Who Should Avail a Moratorium?

This brings us to the next section,

Advantages of EMI Moratorium

  • The moratorium offers temporary financial relief for borrowers who are facing a severe cash crunch. For instance, if you have been laid off during the pandemic or your salary has been cut down drastically, then availing the moratorium will stop loan repayments temporarily. You can then divert the funds in hand to meet your family’s essential needs. 

  • There are no penalty charges for failing to repay EMIs and credit card bills during the moratorium period. 

  • Since the relief is offered under the instruction of the RBI, banks will not report your missed payments to credit bureaus. Thus, opting for the moratorium will not impact your credit scores or credit history. 

Disadvantages of EMI Moratorium 

  • The moratorium is only temporary relief. It is NOT a waiver or concession. This means your outstanding balances will continue to accrue interest during the moratorium period. This means your loan EMI will increase, or the tenure will get extended post-moratorium.

  • For big-ticket loans like home loans, the total loan tenure will increase. This means your overall loan burden increases along with higher interest outgo.

  • Opting for credit card moratorium means you will not be able to use your card until you clear off all outstanding dues or pay the minimum amount due, post-moratorium. 

Few Points to Keep in Mind before Applying for Axis Bank EMI Moratorium

  • If you have more than one loan product from Axis Bank, check out which loan will have a bigger impact post-moratorium. It depends on the loan amount, remaining tenure, and interest rate. Opt for a moratorium on the loan product that will have the least impact and continue with your other EMIs.
  • If you're in the first few years of home loan repayment, then it's highly recommended that you continue paying the EMI. This is because the interest forms a significant portion during the first few years. Deferring EMIs now will lead to a bigger impact on the loan.
  • Impact of Moratorium on Loans – The unpaid EMIs during the moratorium period will be added to your outstanding principal. As a result, either the EMI will increase, or the tenure will be extended post-moratorium. 
  • Let's explain this with an example. Consider a borrower who has taken a home loan of Rs. 25 lakhs at 9% p.a. His current EMI is Rs. 22,493 for 20 years. He opts for a two-month moratorium – July and August. As of June, the outstanding principal is Rs. 24,53,182. By opting for the moratorium, his outstanding principal will increase to Rs. 24,89,949 at the end of August.
  • Impact of Moratorium on Credit Cards – Since credit cards are unsecured loans, the interest rate is generally higher. As a result, opting for the moratorium on credit card payments can increase your financial burden significantly. 
  • Let's explain this with an example. A customer has an outstanding credit card bill of Rs. 10,000 in July. He opts for the moratorium, which results in accruing interest along with GST charges. This means he will have to pay Rs. 11,739 the next month.

Should you opt for the Moratorium from Axis Bank? 

If you are facing a severe cash crunch – salary cut, job layoff, difficulties keeping your business afloat, then the moratorium can offer you timely financial relief. However, if you can manage to pay the EMIs, we recommend that you continue with the payments. This helps you avoid accruing additional interest on your ongoing loans, post-moratorium.