What is the impact on CIBIL score if there is a delay in paying loan EMI?

According to a report by TV9 Gujarati, as per the rules of the Reserve Bank of India (RBI), if an instalment or EMI of any loan is not paid by the end of the scheduled date, it can be considered overdue. Depending on the loan terms and the applicable policy of the bank, even a delay of just 1 day can attract late payment charges.

Whether a bank provides a grace period or not depends on the individual policies of each bank. Banks may provide a grace period, but that does not mean the penalty charged for the delay will also be waived. RBI rules clarify that banks and other regulated lenders cannot impose penalties arbitrarily and must adhere to their published policies with reasonable penalty amounts.

The penalty amount cannot be added to the principal amount of the loan to collect interest on it again. Depending on when lenders send payment information to the credit bureau and what the history of past payments is, a 1-day delay is not necessarily required to have an immediate major impact on the credit score.

At present, credit information is sent to the credit bureau every 7 days and on the last day of the month. If there is even a 1-minute delay in paying the EMI, the credit report will show for the next 7 years that the EMI was not paid on time.

If the EMI is paid on the very next day after the delay, there will not be a very large impact on the CIBIL score, but appearing as a default in the report may change the attitude of banks or they may hesitate to approve loans in the future.

If there are frequent delays in paying the EMI, the negative impact on the credit record can increase over time. If the payment remains overdue for more than 30 days, there is a risk of serious damage to the credit profile.

Under the applicable rules, if the interest or principal amount of a loan remains unpaid for more than 90 days, the account can be classified as an NPA (NPA - Non-Performing Asset).

If an EMI is missed for any reason, the outstanding amount should be deposited as soon as possible. If an auto-debit payment fails despite having sufficient funds in the bank account, it is necessary to contact the bank immediately to find out the reason.

If it is already estimated that difficulty will arise in paying the instalment, one should speak with the bank in a timely manner. After making the payment, the receipt or bank statement should be kept safely.

If any EMI is wrongly shown as outstanding in the credit report, an official complaint should be lodged with the bank and the concerned credit bureau with sufficient evidence.