I'm not able to make the payment for home loan EMI in LIC HFL due to?
Restructuring of the eligible loans are done by almost all the lenders . The moratorium allowed by the bank is over but still the ability to repay the loan has not yet improved for the various reasons . So naturally the borrowers may be happy to get it extended for further period . To understand the real picture of moratorium allowed and it's impact on the bank and if it is still extended , the ultimate impact on the depositors who deposited money for interest is explained . The moratorium can not be extended for indefinite period . Why ? What is moratorium ? Moratorium is a facility allowed to the borrowers who haven't planned for such eventualities , and they were to be temporarily relieved from paying EMI without getting the account classified as NPA and also without affecting the credit score . But it has an inherent cost of interest for a long period , that is - the EMIs are collected after the expiry of full repayment period . So the deferment can't be continued for long time as it will impact the liquidity of the bank very much . The government might have thought that the pandemic situation will be for a quite short time . So the RBI permitted moratorium initially . As the Pandemic is not over as expected in short period , the RBI brought the restructuring of the stressed loans . Now the effect of moratorium , on banks liquidity , is explained . Banks pool the savings from the people as saving deposit and fixed deposit , by offering interest at a certain percentage and the funds raised by the banks are distributed as loans at the rate of interest slightly higher than the rate of interest payable to the depositors , to cover the administrative expenses and profit to be paid as dividend to the shareholders . As the deferment or moratorium has been allowed , the money lent out of Deposit , the interest on loans will not come to the bank , though it has been accrued in the books . But the banks have to pay the deposit and the interest , as committed . So the banks are meeting the committments from the own capital for the time being . Most of the people who deposited money with the bank , particularly senior citizens , depend on the interest earned on the deposits for their livelihood . So Banks can't defer the payment of the deposit or the due interest . As such , there is no job and no income so no repayment , what will happen if the borrowers fail in repayment and how the Banks can meet their commitments towards depositors in the long run . Alternatively to solve the liquidity issue the RBI has evolved the rescheduling of the loan to industries as well as individuals that is for retail loans . Restructuring or rephasing or recasting or rescheduling of a loan is a different nomenclature used to the moratorium of instalments and interest , with slight difference . Under the scheme , RBI has allowed banks to restructure the loans of borrowers who are in financial difficulty and are unable to repay them. In other words , instead of allowing some more moratorium period , a complete reassessment of the situation is made and accordingly the repayment of the instalments are refixed . The processing of reworking is called restructuring or rescheduling . As of now , the retail borrowers also have failed in their repayments due to the loss of job or salary cut as the loan has been given been given by discounting the future salaries , restructuring is necessarily done on the basis of facts and estimates if any . As such , for the borrowers who availed moratorium and thereafter also not in a position to continue EMIs , the rescheduling has been permitted . Let us have a look at guidelines of the restructuring or rephasing of the instalments . Once restructured, such loans would be considered as standard. This means that the lenders wont report the borrower as a defaulter to credit bureaus if the borrower sticks to the rescheduled EMIs . Further as per RBIs Resolution Framework for COVID-19-related Stress, this resolution for only stressed loans will be available to those borrowers who were prompt in repaying their loans regularly as on 1 March 2020. In other words , if there's any overdue as on February end , then the account is not eligible for restructuring . Further the RBI has given a time frame also for this procedures . Borrowers have to submit a restrctured plan before 31 December and the lender has to implement it within 90 days. The restructured loan will continue to be considered as standard till the borrower sticks to the rephasement plan. RBI has also covered the facilities banks can offer to borrowers when restructuring the loan. 1. They can reschedule the payments, convert interest into another credit facility, and provide moratorium of up to two years. 2 . The overall tenure of the loan can also be modified based on the restructuring submitted . In other words , if the salary cut is so severe and the expected cash flow is very meagre then the lender can very much reduce the EMI and accordingly the tenure of the loan can be extended . Having understood the ground realities , the restructuring is done by the Bankers , to ease out the situation , so that the stressed borrower will have to plan effectively to come out of the problem . Now coming to the question , the borrower has to necessarily contact the lender and submit the feasible repayment plan at the earliest . If not done , as the lender deals in public money they will definitely demand the repayment of EMIs as fixed earlier , except the EMIs during the moratorium , to meet their commitments .