Jagoinvestor
October 26, 2020
Loan Moratorium Waiver Benefit by Govt – Get Cashback in your bank account soon!
There is good news for those loan borrowers who didn’t opt for the loan moratorium benefit which was introduced by govt due to the pandemic. The govt has decided to pay the interest on the interest of the loan outstanding and pass on the benefit in form of cashback to loan borrowers.
Let me explain
So those borrowers who have opted for loan moratorium benefit will only be paying the simple interest on the loan outstanding and not the interest on the interest. This means that all those who paid their EMI’s are in a way getting penalized for not taking the benefit. Hence govt has with this benefit where all those loan takers who have paid their EMI’s on time will also be just paying the interest on their loan outstanding and not the compound interest for the period of 6 months (from Mar 1 to 31st Aug 2020)
Note that the interest applicable for calculation purpose will be as on 29/02/2020.
However because the EMI payments have already been made, the govt will pay back the difference to your bank account in form of a cashback in a few days. Let me summarize it
- What you have to pay : Only the simple interest on the loan outstanding as of 29th Feb, 2020
- What you paid : Compound Interest on the loan outstanding as of 29th Feb, 2020
- What you will get back : Difference between Compound and Simple Interest for 6 months
Example Calculation
Here is a sample calculation for a loan outstanding of Rs 50 lacs (as of Feb 29,2020) with an interest rate of @9%
Simple Interest = 50,00,000 * 9% * 6/12 = 2,25,000
Compound Interest = 5000000*((1+9%/12)^(12*0.5) -1) = 2,29,261
Difference = 2,29,261 – 2,25,000 = Rs 4,261
So you will get back this amount in form of cashback
This benefit is available on
- Housing Loans
- Automobiles Loans
- Credit Card Debt
- Education Loans
- Consumer Durable Loans
- MSME Loans
Other Eligibility Criteria to get this benefit
- The Loan Outstanding should be up to Rs 2 crore
- The Loans should not be NPA as on 29/2/2020
This benefit will also be passed to someone whose loan is closed during the moratorium period. Do let me know if you have any questions on this and I will be able to answer that.
Withdrawals can then be a bit more complicated than a credit account and a savings account (used for EMI debits). In such special cases, the borrower should approach the bank from the place of borrowing.
I have paid all my credit card payment on time for SCB credit card during March 1st to Aug 1st.
but banking saying I will not cash back ,only people who opted for loan moratorium will get it
I think it will not apply for credit card, as you have not applied for any loan
Is this applicable on personal loan? I have a personal loan from the standard chartered bank and I didn’t opt the moratorium, however, I didn’t received any penny yet as per this scheme. Whom should I contact then?
Also, what is the scheme name, and is there any circular or notification from the GOI or RBI?
Yes, its for personal loan also ..
Has anyone received this cashback? I have checked my LIF HFL Loan account and also my credit card account. I don’t see any credit? Can any one tell how to check this?
I think some housing finance companies are not crediting in bank but in the loan account and it gets adjusted with your next EMI .
Manish
great post and the calculation example that you have shared is very helpful, but i have one question, is those persons who have not opted for moratorium and paid emi’s as per schedule, Going to receive the same benefit
Its for them only!
Is interest on interest applicable on interest paid every month on overdraft account?
No I dont think so .. its not a consumer loan
I only took 3 months monatorium will u be getting cash back?
Yes you will
Hi, when cashback will be credited to bank account
Regards
Sreenath
AS per reports, it should happen around Nov 5th
0.85 % calculation is not correct it is 0.085
Yes, its mistake .. its .085%
Hello,
I opted for 3 months morotorium, after couple of months post morotorium I transferred loan from NBFC to SBI to take benefit of lower interest rate from SBI.
Could you please explain who will assist me in getting this benefit of simple interest and respective refund in case. NBFC or SBI? or Am I eligible to get it?
Thanks and Regards,
Shrikant Gavhane
All calculations will happen at Bank level and money will be credited if you are eligible. You don’t have to do anything !
Also, its a very small amount to worry so much!
What about interest rates on credit cards’ dues ? How much could be minimum simple interest rate when their simple charges start from 36% per annum ?
It will be interest levied by bank .. But you get this only if you were paying the interest!
If someone had closed the Loan account and also linked savings account (used for EMI debits) then getting cash back may be little cumbersome. In such special cases, may be the borrower should approach the bank from where loan is taken.
Yea that may get technical.. I think bank will take care of calculations at their end.
Dear Sir,
It was indeed an article with super clarity. I have different situation though and hence requesting your answer. I had taken moratorium for one home loan and did not for the other. I closed both loans and transferred them to some other bank in the month of September. How will i be benefited?
The calculations will be done by banks automatically.. no action needed from your end
Until when it will be deposited and how i will get notified.
5th nov
I have not opted for moratorium and paid my emis as per schedule.
Will I also receive the difference amount?
Yes
So, no action required by us. This should automatically happen. Correct ?
Yes