Explained: How much benefit will you get from compound interest waiver on loan?

Even those who paid regular installments during the six-month EMI waiver period offered by the banks now have to get some relief. On Tuesday, the government made it clear that those who have paid regular EMI will get a cashback of interest. The RBI announced a moratorium (relief from paying EMI) in March. The relief lasted until the month of August. After the deadline, the banks were given two options to pay the amount not paid in six months in a lump sum or to adjust it to the loan. However, the government has given relief to the beneficiaries of the moratorium from paying interest, while those who have paid the loan regularly will also get cashback. Read the details of who will get the benefit of this advertisement in this article.

How will the calculation be done?

Suppose you have taken a home loan of Rs 30 lakh, of which you pay an installment of Rs 30,000 per month. Thus, you have to pay Rs 1.80 lakh in six months. Now suppose that out of this 1.80 lakhs, you had to pay 90 thousand as principal (principal or principal amount), and the remaining 90 thousand as interest. If you took advantage of the moratorium, and the government did not provide interest relief, you would also have to pay interest on the Rs 90,000 interest you had to pay to the bank in six months, which you no longer have to pay.

How to get benefits?

You may have figured out how to calculate interest rates during a six-month moratorium. This is how the cashback you get if you don't take advantage of it will be calculated in the same way. From the above example, if you have taken a home loan of Rs. The annual interest rate is Rs 4500 for six months, which you will get cashback.

How will the cashback be adjusted?

The cashback you are entitled to will be adjusted to the principal amount of your loan. From the above example, if you have a principal amount of Rs. 25 lakhs in your loan by October 2020, and the cashback you are entitled to is Rs. 4500, then Rs. 4500 will be less than your principal amount. In general, people who are still in the early stages of the loan will benefit the most, as in the case of home loans, most of the amount from the EMI is deducted as interest at the beginning.

Is there a separate application for this?

The government has made it clear that all eligible borrowers will get the benefit of interest waiver on interest. This means that if you have paid a regular loan during the moratorium announcement, the cashback you deserve will be credited directly to your account. You do not need to apply to the bank separately. Cashback will be credited to the account of each borrower by November 05.

What types of loans will benefit you?

People who take MSME loans (business loans), education loans, home loans, loans to buy goods, car loans, credit card loans, consumption loans, personal loans will get this benefit. The condition is that the loan amount should not exceed Rs 2 crore. However, you will not get the benefit on any loan you have taken on your FD or shares or any other type of security lying in the bank.

What if a loan is completed from March to August?

Even if you have repaid a loan during this period, you are entitled to a cashback on the amount of compounded interest accrued on it. In such a case, the bank will deposit the cashback in the savings or current account of the eligible person. If the borrower has not given his account details, he can contact the bank and give the details of the account he wants to get cashback on.