Before Diwali, you will get Moratorium cashback, find out how much will be in the account

 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 during 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 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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