What is a moratorium on a loan?
A period where repayment is deferred.
A stated period at the start of a loan during which instalments do not fall due. Interest usually continues to accrue through it, so a moratorium changes the schedule rather than the cost.
Moratorium: a worked example
A ₹10 lakh loan with a six-month moratorium at 14% accrues roughly ₹70,000 of interest before the first instalment is due. The borrower who understood the moratorium as a holiday from the loan rather than from the payments is surprised by the schedule, and the surprise is avoidable.
Why does moratorium matter?
Because it is routinely mis-sold as free time. The cost is unchanged and often higher; only the timing moves.
What the regulations say about moratorium
The distinction belongs in the Key Facts Statement, where the all-in cost is disclosed as an annual percentage rate computed from the actual cash flows — which is where a moratorium shows up honestly.
Related terms
- EMI (equated monthly instalment) — A fixed monthly payment covering both interest and principal.
- Interest accrual — Interest earned as time passes, whether or not it has been collected.
- KFS (Key Facts Statement) — A standard-format summary of what a loan actually costs.
From the people who wrote this
Run your lending on Lenviq
The section above describes what a lending system has to do about this term. Lenviq does it — on every account, computed at day-end, with the direction it comes from recorded against it.
Lenviq is loan origination, servicing and accounting for NBFCs, built by FastLegal Technologies.