The Covid-19 pandemic, followed by a nationwide lockdown, resulted in mass layoffs and wage cuts that left employees helpless. An unexpected turn of events has exacerbated the plight of the people, especially those who do not have a well-prepared financial plan to incorporate such a crisis. Here we bring you some options to help you sail through these adverse times.
People facing job loss –
Fixed Income Investments – Debt securities, fixed income investments in recurring deposits, or time deposits that have no major financial objective may be redeemed. Because the returns generated by such fixed income investments are generally lower than the long-term returns. However, repaying recurring deposits before they are due could incur a prepayment penalty and also the risk of capital erosion.
EPF body – To provide some relief and support to workers facing lower income, the government has allowed EPF subscribers to redeem their grant or 75 percent of their EPF credit for up to three months. The EPF subscription is only recommended, however, if existing fixed-income investments are insufficient to rule out disruptions to earnings. This is because leaving the EPF can affect security after retirement.
Convert credit card fees into EMIs – Those with credit cards who are unable to repay their fees can convert their outstanding amounts into EMIs. Compared to funding fees for unpaid credit card bills, the interest rate on such EMI conversions is much lower. The repayment of EMI conversions is up to 5 years, so that cardholders can repay the total amount in small tranches depending on their financial capacity.
Relief measures as part of the RBI resolution framework – As a relief measure for existing borrowers affected by the Covid-19 pandemic, the RBI has introduced some guidelines. Individual borrowers who did not take advantage of the loan restructuring programs announced last year were allowed to perform a one-time loan restructuring prior to September 30 this year. This scheme can be used by people whose credit accounts were classified as “Standard” on March 31, 2021. 25 million.
Emergency Fund – The aim of an emergency fund is to cover important expenses incurred as a result of job loss or other reasons, including illness. This fund should be able to cover the important or unavoidable expenses for at least 6 months. People who do not have an emergency fund should prioritize building a fund for future needs. This fund should be invested in high yield savings accounts so that instant payouts are easy.
Loans – When approving loans, lenders take into account the repayment ability and job description of the applicant. Due to the rampant pandemic, banks and NBFCs have become very picky about lending. Hence, people working in industries adversely affected by COVID-19 will face major challenges. One can consider gold loans, real estate loans, and securities loans to eliminate financial bottlenecks. In comparison, lenders are more convenient in obtaining this type of loan.
Adequate health insurance coverage – The COVID-19 pandemic has made the need for adequate health insurance coverage clear. Immediate hospitalization can end a person’s lifelong savings, making it difficult to meet future expenses. People covered by employer-provided group health insurance should also take out other health insurance.
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