If you have availed a loan of Rs. 50 lakh for 19 years, you will be relieved of interest on interest during the 6-month moratorium facility
- There has been another relief for those availing the facility of the loan moratorium.
- So far, the interest on the loan interest has also seemed to be the compounding interest,
- but now the loan interest will not have to be interesting (interest on interest during moratorium).
- As per the present relief, the government will have a burden of about Rs. 5000-6000 crores.
- Now, these reliefs have not been received by every borrower.
- If the government decides to give this relief to every borrower,
- it will increase the burden of about 10,000 to 15,000 crore rupees.
- After the interest relief, a question is coming up as to who will benefit from it
- and how much money the common man will save after this relief
- (How much you will save after interest on interest).
- Let us know the answer to each of your questions in an easy language.
Who will get the benefit of no interest on moratorium?
- The government has filed an affidavit in the Supreme Court stating that interest on interest on MSME loans, education, housing, consumer, auto, credit card arrears, and consumption loans will be waived.
- According to the government, interest subvention will be given on loan interest up to Rs 2 crore in the 6-month loan moratorium time. This will relieve them of the burden on the customers.
It will still have to pay the ‘price’!
Everyone who avails the facility of loan moratorium will have to keep in mind that his loan has not been interest-free during the moratorium during the Corona period. That means the relief is only from the interest on interest, not the interest on the principal unmount. This means that if you have taken a loan of Rs. 50 lakh for 19 years, you will have an interest of about Rs. 2 lakhs, which you have to pay. If you do not pay it in this period, it will be associated with your principal unmount, which you will have to pay with your EMI every month, which will increase your EMI.
What will be the impact on the common man?
The lockdown was implemented in March due to the corona crisis. Due to the lockdown, the business was closed and many people were in a position not to repay the loan EMI. In view of this, on the orders of the Reserve Bank of India (RBI), the banks got a six-month moratorium for not paying EMI from the moratorium facility, but people were disturbed because they had to pay interest on loan interest also. Now customers will get relief from this additional burden.
How much will your money survive this relief?
If you have taken a loan of 50 lakh for 19 years (228 months) during the commencement of the facility of the moratorium, you will have to pay an interest of about Rs. 2 lakhs between March to August, i.e., 6 months. Now assume that you could not give any money during the moratorium and the bank also linked your interest with your principal unmount. Your EMI was increasing by about Rs 1709 per month in 228 months. But now interest will not be interest, your EMI will increase to just Rs 877 per month. That means, in the case of a loan of 228 months, you will save Rs 832 per month. This means that due to no interest in interest during the moratorium, your loan would be a total of 832×228 = 1, 89696 rupees in 19 years.