Before Diwali, you will get Moratorium cashback, find out how much will be in the account
The compound interest (interest on interest) charged by the banks during the 6-month loan moratorium period will be credited to your account by 5th November. An order has been issued by the RBI.
The compound interest (interest on interest) charged by the banks during the 6-month loan moratorium period will be credited to your account by 5th November. An order has been issued by the RBI. The Reserve Bank of India (RBI) has directed all lending agencies, including non-banking financial companies, to repay the interest charged on loans up to Rs 2 crore for a period of six months starting March 1.
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If you have taken a home loan, education loan, personal loan or any other type of loan with an amount less than Rs. Before Diwali, the government will give you back the double interest charged.
But the question on everyone's mind is how much money they will get back. Simply put, you will get back any difference between compound interest and simple interest paid for 6 months (March-August). Think of it as cashback in simple language.
The formula for calculating compound interest is a bit complicated. So we can tell you with simple calculation of how much interest you will get back. Let us understand it by example.
How much money will be refunded?
Example number 1
Suppose you have taken a loan of Rs 50 lakh. On which you are paying EMI at the rate of 7%
Compound interest calculation
Loan Amount- 50 lakhs
Interest - 7%
Time limit- 6 months
Compound interest- 1,77,572
Simple interest calculation
Loan Amount- 50 lakhs
Interest - 7%
Time limit- 6 months
Simple interest- 1,75,000
How much cashback will be refunded- Compound interest- Simple interest
1,77,572- 1,75,000
= 2572 rupees
That means Rs 2572 will be returned to the account in November.
Example number 2
Compound interest calculation
Loan Amount - 30 lakhs
Interest - 7.5%
Time limit- 6 months
Compound interest- 1,14,272
Simple interest calculation
Loan Amount- 30 lakhs
Interest - 7.5%
Time limit- 6 months
Simple interest- 1,12,500
How much interest will you get- compound interest- simple interest
1,14,272 - 112500
= Rs.1772
Example number 3
Suppose you have taken a loan of Rs 35 lakh. On which you are paying EMI at the rate of 6.9 per cent.
Compound interest calculation
Loan Amount- 35 lakhs
Interest - 6.9%
Time limit- 6 months
Compound interest- 1,22,499
Simple interest calculation
Loan Amount- 35 lakhs
Interest - 6.9%
Time limit- 6 months
Simple interest- 1,20,750
How much interest will you get- compound interest- simple interest
1,22,499 - 120750
= 1749 rupees
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This calculation will give you an estimate of how much you will get back. Customers who took advantage of the moratorium or not were waiting for the RBI's order after the central government's announcement. Now, on Tuesday, the RBI has directed all banks and lenders in the country to extend the benefit of interest rebates to consumers as soon as possible.
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