Representational photo.

MUMBAI: With just two days left for the next EMI cycle to begin, most big lenders are unprepared to follow the Reserve Bank of India’s blanket order allowing borrowers to hold back from paying instalments for the month. Top lenders such as State Bank of India, HDFC Bank, ICICI Bank, Kotak Bank and Axis Bank have not activated any channel for customers to exercise an option.

As a result, there was confusion among borrowers on Monday as many received text messages alerting them that their loan EMIs would be debited from their accounts and they needed to maintain adequate balance. Starting Wednesday, borrowers are due to pay their monthly instalment but banks are not ready yet to implement the special facility created by the RBI, which allows borrowers to avoid paying three EMIs without being classified as a loan defaulter.

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Most bank branches have not received any instructions from their headquarters on deferment of instalments and many are reluctant to accept requests. On their part, bankers suggested, deferring EMIs is an option for borrowers, but there is no benefit for those who can pay.

The SBI, source told TOI, will put in place an option for borrowers to repay failing which the EMIs will be deferred. Mortgage player HDFC will reach out to borrowers over the next few days through emails and SMSs, informing them about the option, which can be through a link on its website, a spokesperson said. Borrowers will also have the option to continue with the EMIs.

Another private bank executive said that it may take a couple of days to operationalise the deferment option. One bank said that it is considering delaying EMI debits for the first few days until a system is in place.

In case banks do not pause standing instructions for debiting bank accounts and the transaction fails, most banks have a penalty equal to that of a cheque bounce, with charges ranging from Rs 200 to Rs 400. For most retail loans, including housing, auto and other personal loans, banks obtain standing instructions to debit monthly EMIs from a customer’s salary account. A bulk of the deductions happen in the first week of the month.

“Customers must realise that this is not a waiver but just a facility provided to avoid being classified as a defaulter if they miss their instalment due to liquidity problems. There is no advantage in delaying as interest charges will continue to accrue for the three months even if it is collected later,” said a banker.

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