EMI Bounce: Bank gives 4 chances when EMI bounces, but keep these things in mind

News India Live, Digital Desk: Taking a home loan is a way for many people to buy their dream home. But, life can have unexpected financial problems at any time, and in such a situation, the EMI (Equated Monthly Installment) bounce of the home loan is a common problem. There are many questions in the mind when EMI bounces: Will the bank take immediate action? Will my credit score be spoiled? Will my house be snatched away?

No need to panic! Banks do not declare you a defaulter immediately. Bank to you in large amounts like home loan 4 opportunities Give it, but it is very important to use these occasions properly and to avoid some mistakes. Let’s know what happens when EMI bounces, how many opportunities the bank gives, and what precautions you should take:

When your EMI bounces for some reason (due to lack of adequate balance or technical problem), the bank does not take strict action immediately. They follow a certain process:

1. First bounce (30 days grace period):

• What happens: The bank informs you about this just after your EMI bounces. At this time you will get many reminder calls and messages from the bank.

• Opportunity: The bank gives you a chance to pay the dues within a period of 30 days. It is classified as ‘Special Mention Account’ (SMA-0).

• Caution: Pay the outstanding amount during this period. If not repaid, you may have to pay a little penalty and bounce charge.

2. Second bounce (31 to 60 days):

• What happens: If you do not pay EMI within 30 days, the bank puts you in ‘Special Mention Account’ (SMA-1). During this time you will get more calls and reminders from the bank.

• Opportunity: You get a chance of next 30 days (ie 31 to 60 days) to repay your EMI. The bank will ask you to contact for a solution.

• Caution: Now penalty and bounce charge must have increased. Your credit score may begin to be affected.

3. Third Bounce (61 to 90 days):

• What happens: If you do not pay EMI even for 60 days, then your account goes to ‘Special Mansion Account’ (SMA-2). Now notice and warnings from the bank will start becoming more serious.

• Opportunity: You get a chance of next 30 days to repay your EMI and outstanding penalty (ie total 61 to 90 days).

• Caution: Your credit score on this stage will have been affected to a great extent. It can be difficult to get a loan in future.

4. Fourth bounce (after 90 days-‘Non-Performing Asset’ or NPA):

• What happens: If you do not pay your EMI within 90 days, the bank declares your loan account as ‘non-performing asset’ (NPA) i.e. ‘non-performing property’. This is a major loss for the bank.

• Opportunity: Now the bank can start the process of occupying and auctioning the property under the Sarfaesi Act. You will get a notice to vacate the property.

• Caution: This is the most dangerous situation. Your credit score will be completely ruined and you will face legal action.

What should you do? How to avoid mistakes:

1. Contact the bank immediately: As soon as you feel that your EMI is going to bounce or is done, contact your bank immediately. Tell your situation.

2. Explain the problem and find solutions: Tell the bank about your financial difficulty. The bank can give you some solutions, such as:

   • EMI restructuring: EMI can reduce the amount and increase the duration.

   • Mortorium: EMI may allow for some time to stop payment (interest will continue to be charged).

   • partnership: In some cases, the bank may find a way out with you.

3. Understand Penalty and Charges: Understand the charge and penalty on every bounce and pay as soon as possible.

4. Take care of credit score: Once the credit score is spoiled, it is very difficult to improve it. This will affect your ability to take any kind of loan in the future.

5. Not to avoid, face: Do not make the mistake of hiding from the bank or not answering call-messages. By doing this, the bank can take more strict action.

EMI bounce can be a temporary problem, but it is very important to take it seriously and take timely action. By taking the right steps at the right time, you can protect both your home loan and credit score.

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