Loan Moratorium: The news of relief for those taking loan moratorium is that banks will not recover the charge on loan moratorium.
The relief news for those taking loan moratorium is that banks will not recover the charge on loan moratorium. This information has been given by the Central Government to the Supreme Court. The central government told the Supreme Court that it is ready to forgive interest on interest during the moratorium period (March to August). This relief can be given on a loan of up to 2 crores. This will include loans taken for MSME, education, housing, consumer durable, auto, credit card dues, business and consumption. Apart from this, this interest will not be collected even on credit card dues.
How much installment was increasing so far?
At the option of 3 months
It can be understood as if you assume that you have taken a loan of about Rs 28.5 lakh for 20 years. The interest rate on this is around 8 percent. The EMI to become the first month of Moratorium was close to Rs 25000. At the same time, before the Moratorium, you have paid 12 installments and there are 228 installments left. If you had opted for the Moratorium for the first 3 months, then it increased to Rs 25478 after the EMI Moratorium. That is, you have to give around 58 thousand rupees extra.
At the option of 6 months
At the same time, if you choose another option of 6 months, after August 2020, your EMI generated will increase to Rs 26007. In this way, you will have to pay a total of additional 1.04 lakh rupees. Here, the remaining duration of your EMI will be 228 in both the conditions. That is, in this option, whatever interest is created during the moratorium period, it will be added to the remaining amount of the loan. And it should be divided equally among the remaining EMIs.
Note: This example is based on the option given by HDFC Limited during the Moratorium.
What other options were there?
Another option was to pay a lump sum in August for the interest that would not accrue on the installment of the moratorium period. Another option was not to change the EMI but to extend the loan period. In this condition, the additional burden of 10 EMIs will increase on you. The last option was to allow EMI to be cut as usual.
What will happen after relief from interest on interest?
This relief given by the central government now means that the people who are taking benefit of the loan moratorium will now only pay the normal interest of the loan. That is, if you have taken a 3-month moratorium, then as before, every month you will continue to pay EMI around 25000 rupees. The 3 months you opted for, those 3 EMIs will go ahead. This rule will also be on 6 months moratorium. 6 Normal EMI will increase. That is, you will not have to pay additional interest or additional EMI.
What does it mean for the government?
In this affidavit, the government has said that if the government had not left the burden of debt waiver on the banks, it would have cost the banks 6 thousand crore rupees. This would have a very bad effect on the banking system of the country. In this situation, the government should bear the burden of interest subvention. This is the only solution. If this responsibility is left to the banks, it will clear a large part of their net worth and it will be difficult for all banks. That means the government will have to bear this burden now.