Loan Moratorium: The Government has filed an affidavit in the Supreme Court to provide relief to the loan borrowers. As per reports, the central government’s affidavit says that it will waive-off the interest on interest accrued during the extension period and is in mood to even provide relief to those who continued to pay their EMI even during the COVID-19 financial crisis and not just to to those borrowers who had availed EMI moratorium. Zee Business has reported that it will be a big relief to all loan borrowers who have taken loans up to Rs 2 crore and availed EMI moratorium benefit given by the Reserve Bank of India (RBI) during lockdown.
Highlighting the key points of the EMI Moratorium relief that is being explained in the Government affidavit, Zee Business exclusive report said, “The relaxation, in regard to interest on interest (compound interest) will be available to SMEs, education, consumer durable, auto, business and personal loan borrowers who have taken loan up to Rs 2 crore. Credit card repayment delayed due to the EMI moratorium will also come under this relief package. The Government of India affidavit says that the compound interest will be refunded to the loan borrowers and for that the central government will have to bear around Rs 6,000 to Rs 7,000 crore burden.” The affidavit says that the government is mulling to provide relief to those loan borrowers also, who continued to pay their EMI on time during the period of moratorium offer.
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Explaining the benefit that a consumer will get if the proposal is accepted by the Supreme Court, Zee Business report said, “If a home loan borrower has taken Rs 50 lakh loan at 8 per cent per annum interest rate and paid EMI for first one year, then he will have to repay the EMI for next 19 years. In this period, due to the interest on interest getting added into the EMI around Rs 832 will get added into one’s monthly EMI. So, in 19 years, the home loan borrower will be able to save around Rs 1.89 lakh from this relief offered by the center in its affidavit.”
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Speaking on the benefit in regard to the compound interest accruing during the EMI moratorium period, Harsh Roongta, Certified Financial Planner, said, “Any relief is a welcome relief and one should grab this with both hands. But, as far as those who continued to repay their loan during the lockdown, the government of India can provide relief as those loan borrowers who availed bank loan on time are paying EMI at higher interest rate. If it can be fixed at current levels, then it will be a big reward for those loan borrowers who continued to repay their loan even during the lockdown.