What is Moratorium?
A pause on loan repayments — common in education loans during study.
During a moratorium you usually make no payments, but interest often still accrues and is added to the principal, so the balance grows. Repayment begins after the moratorium plus a grace period.
Example
A 3-year study moratorium on a 2,000,000 loan grows the balance before EMIs start.
How a moratorium works
A moratorium is an agreed pause on loan repayments — common during a study period on an education loan, during construction on a home loan, or as temporary relief during hardship. During the pause you make reduced or no payments, but in most cases interest continues to accrue on the outstanding balance.
The catch
Because interest usually keeps building and is then added to your principal (capitalized) when repayment begins, your balance — and every future instalment — is larger than before the pause. A moratorium eases short-term cash flow but raises the total cost of the loan, so it is best used deliberately, not by default.