What is a Moratorium?

As a relief measure for people in view of the coronavirus pandemic, the Reserve Bank of India (RBI) allowed a three-month moratorium on term-loan and credit card repayments. Lending institutions were directed to defer the EMIs of their customers opting for this moratorium scheme. But what is a moratorium and how does it work? Let’s take a look.

 

A moratorium is a temporary suspension of activity until future events warrant lifting of the suspension or related issues have been resolved. Moratoriums are often enacted in response to temporary financial hardships.

 

How does a moratorium work?

 

A moratorium is often effected in response to