Loan Moratorium: If the interest on loan moratorium gets relief from interest, then how will the loan holders benefit.
Loan Moratorium: There is a hearing in the Supreme Court today in the case of giving interest on interest on loan moratorium. In the last hearing, the court ordered the filing of a new affidavit by October 12. Earlier, in the affidavit filed earlier, the central government had asked to waive ‘interest on interest’ on loans up to Rs 2 crore. The court had said that no guidelines were issued by the central bank for providing relief on interest. Therefore, the Central Government and the Reserve Bank of India were asked to file a fresh affidavit.
On the loan moratorium case, the central government had told the Supreme Court that adequate relief package has been given to various sectors. In the midst of the current epidemic, it is not possible for the government to give more relief to these sectors. The Center also emphasized that the court should not interfere in the matter of financial policies.
What is lone moratorium
Lockdown was announced throughout the country during the Corona Virus epidemic. In such a situation, the income of many people was affected. In view of this, the Reserve Bank gave the facility of loan moratorium. That is, the loan holders had the option to postpone the EMI to be paid every month on the loan. This facility was given for 6 months from March to August 2020. But those who had taken the moratorium of 3 months or 6 months, they would have to pay interest for these periods on further interest. A petition was filed in the Supreme Court regarding this. It said that if interest is to be charged on interest then what is the benefit of providing the facility. This is a double whammy on loan holders.
Government gave signs of relief
In the last hearing, the central government had told the Supreme Court that banks will not recover the charge on loan moratorium. He is ready to waive 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 can be saved
At 6 months option: Suppose you have taken a loan of about 28 lakh rupees for 20 years. The interest rate on this is around 8 percent. The EMI to be made before the Moratorium was around Rs 25,200. At the same time, you have already paid 12 installments before the Moratorium and there are 228 installments left. If you choose another option of 6 months, after August 2020, your EMI generated will increase to Rs 26007. In this way, the burden of additional 1.84 lakhs is increasing on you. But if you get relief, you can save so much. The remaining period of EMI will remain 228 only.
At 3 month option: If you had opted for Moratorium for the first 3 months in the above-mentioned condition, then it increased to Rs 25478 after EMI Moratorium. That is, you have to pay around 60 thousand rupees extra.
(Note: This example is based on the option given by HDFC Ltd. during the Moratorium.)
What will happen after the relief
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.
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