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Last Updated : Jan 27, 2017 06:57 PM IST | Source: Moneycontrol.com

Demonetization: Use grace period for insurance premiums, EMIs

The Indian government has come up with quick fixes to lighten the burden of low cash supply on citizens and encourage staying invested.

Adhil Shetty
BankBazaar

Whether the advantages of demonetization outweigh its disadvantages is debatable and will be clearer with time. At the moment, the liquidity crunch associated with it is cutting down the spending and investment in the economy. The reduction in investment would in turn reduce the potential growth of GDP. One thing the move has brought about is drawing focus on managing personal finances. The Indian government has come up with quick fixes to lighten the burden of low cash supply on citizens and encourage staying invested.
 
Considering that a lot of transactions still happen in cash, government has taken some initiatives so that people can focus on spending cash in necessities, allowing payment holiday for repayment of loans and payment of insurance premiums. Here are a few ways to manage finances better at the face of demonetization:

1: Use of the grace period for renewal of life insurance policies

The insurance regulator Insurance Regulatory Development Authority (IRDAI) has instructed all life insurance companies to offer a grace period of 30 days for all renewal premiums that fall anytime between November 8 and December 31, 2016.  The annual mode premium payment due on December 31 can now be made on January 31, 2017. So, what it means for you as a policy holder is that you can prioritize other necessary transactions amid cash crunch, taking advantage of the grace period without having to worry about any penalty for delayed payment. However, IRDAI has made it clear that it will only accept the newly issued notes, should you choose to pay by cash.

2: Your loan repayments can wait

The Reserve Bank of India has allowed individual loan borrowers and corporate borrowers with home, commercial, farm or term loans of any amount up to Rs. 1 crore an additional 60-day window for loan repayment. The grace period is applicable on loans with repayment dates falling between November 1 and December 31, 2016.

Banks and other financial institutions will ensure that the delay in payment doesn’t impact your credit score or lead to categorising of your loan as an NPA. However, the interest payments during the period will accrue on your account. So, make your EMI payments as soon as possible to avoid extra interest payment.
 
3:  Avail e-wallet discounts and cashbacks

With the economy moving towards completely cashless, e-wallets have become all pervasive in the payment eco-system. From cab hailing companies to restaurant finder companies and banks, enterprises are increasingly adopting e-wallets for carrying out transactions and each company is trying to outperform the others through discounts and cashbacks. Some e-wallet companies are offering discounts on products through tie ups with multiple retailers. So, purchasing online through e-wallets don’t just ensure convenience in purchase and transactions without using cash, it also helps you cut cost through discounts and cashback offers.  The amount you get back through cashback can be used for future transactions.

Now, you can even access multiple e-commerce sites through e-wallets, making shopping more cost-effective for users. The e-wallets technology is now slowly tapping into small informal stores such as grocery and vegetable stores. A prominent online grocery seller already has its own e-wallet to facilitate transactions at your convenience.
First Published on Jan 27, 2017 11:26 am
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