Moratorium

A moratorium refers to a temporary suspension, postponement, or delay of a specific activity or legal or financial obligation. In the financial context, it typically means a temporary halt on loan repayments or debt obligations, granted to borrowers during periods of financial stress or economic uncertainty.

Key Features: It provides temporary relief to borrowers facing financial hardship. During the moratorium period, borrowers are not required to make repayments (principal or interest, depending on terms). The loan tenure may be extended by the duration of the moratorium. Interest may continue to accrue during this period, unless specifically waived. Example (India): During the COVID-19 pandemic, the Reserve Bank of India (RBI) announced a six-month moratorium (March–August 2020) on term loan EMIs to help individuals and businesses manage cash flow difficulties