What is a moratorium?

An officially authorised suspension of an obligation, such as loan repayment, for a defined period.

Does a moratorium cancel the debt?

No. It postpones payment or enforcement. The liability remains, and interest typically continues to accrue during the period.

Moratorium

noun (countable)

/ˌmɒrəˈtɔːrɪəm/

A legally sanctioned suspension of an obligation — typically the repayment of a debt or the enforcement of a law — for a specified period. In Indian banking, moratoriums are granted by the RBI or courts during systemic stress; the most notable instance was the six-month loan repayment moratorium (March–August 2020) under Section 21 of the RBI Act, extended to borrowers across all scheduled commercial banks during the COVID-19 pandemic.

✍️ Usage in a UPSC answer

The Supreme Court's 2020 ruling in Gajendra Sharma v. Union of India upheld the RBI's six-month moratorium on EMI payments as constitutionally valid, directing that accrued interest during the deferral period be waived for loans up to Rs. 2 crore.

Synonyms

deferralsuspensionpostponementreprievestandstill

Antonyms

enforcementaccelerationforeclosureimmediacy

🌱 Word Family

moratory (adjective, archaic), moratoria (plural noun)

🔡 Root

Medieval Latin moratorium = that which delays; from morari = to delay, from mora = delay

📜 Etymology

The Latin root mora (delay) passed into legal Latin as moratorium in medieval debt-law contexts. The word entered English legal usage in the 19th century, appearing in British statutes dealing with wartime debt obligations. It acquired its modern banking-policy resonance after the 2008 global financial crisis, when various jurisdictions invoked moratoriums to prevent a cascade of defaults.

🧠 Memory Hook

More-at-or-ium: the borrower gets 'more time at the door' before the lender can knock. The Latin mora literally means 'delay at the threshold.'

🎯 How This Word Works in UPSC Writing

A legally authorised suspension of an obligation for a defined period, which makes it a GS3 word for debt and banking. The idea to convey is that a moratorium pauses enforcement, it does not cancel the underlying liability, and interest usually continues to accrue. That distinction between deferral and forgiveness is where most loose usage collapses.

⚖️ Don’t Confuse It With

A moratorium suspends payment or enforcement temporarily. A waiver gives up the claim. A write-off removes the asset from the lender's books without extinguishing the borrower's liability. Restructuring changes the terms of the debt rather than pausing it.

🇮🇳 Hindi Meaning

अधिस्थगन (adhisthagan); in banking usage स्थगन (sthagan) is common for a payment pause.

❓ Common Questions

What is a moratorium?: An officially authorised suspension of an obligation, such as loan repayment, for a defined period.
Does a moratorium cancel the debt?: No. It postpones payment or enforcement. The liability remains, and interest typically continues to accrue during the period.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

Relevant across:GS3 · Economy, Environment, S&T & Security

Same term, other paper:Moratorium (Polity)

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